Foundation
& Future
Annual Report 2021
TABLE OF CONTENTS
Table of Contents
The Galapagos group
CSR report
Letter from the management ......................................4
Our commitment ........................................................71
COVID-19 impact ........................................................ 11
Driving innovation .......................................................76
At a glance ................................................................... 13
Our employees ............................................................85
Strategy ........................................................................ 16
Conducting business ethically ...................................93
Going concern statement .......................................... 17
Environment, health, and safety .............................103
Risk management and internal control ................... 18
CSR at Galapagos – Summary .................................107
The Galapagos share ................................................. 20
Reporting on EU Taxonomy .....................................109
Overview of Galapagos NV ........................................ 23
Disclaimer and other information ............................ 25
Corporate governance
Research & Development
Policies ........................................................................112
Supervisory board ....................................................114
Our pipeline and drug discovery engine ................. 29
Committees ...............................................................119
Versatile target discovery platform .......................... 31
Management board ..................................................121
Our inflammation franchise ...................................... 34
Share capital and shares ..........................................126
Our fibrosis portfolio ................................................. 52
Shareholders .............................................................129
Other pipeline ............................................................. 53
Remuneration policy ................................................133
Our R&D collaborations ............................................ 55
Remuneration report ...............................................133
Risk factors
Conflict of interests and related parties ................160
Code of Business Conduct and Ethics ....................161
Commercialization ..................................................... 58
Statement by the supervisory board ......................162
Product development and regulatory approval ..... 58
Risks related to our financial position and need
for additional capital .................................................. 60
Financial statements
Consolidated financial statements .........................164
Reliance on third parties ........................................... 61
Notes to the consolidated financial statements ...173
Competitive position .................................................. 63
Non-consolidated financial statements .................256
Intellectual property .................................................. 64
Organization, structure and operation .................... 65
Galapagos shares ....................................................... 68
General statement ..................................................... 69
Report of the statutory
auditor
Report of the statutory auditor ...............................260
Other information
Glossary ......................................................................266
Financial calendar .....................................................282
Colophon ....................................................................283
Contact .......................................................................284
2
Galapagos NV Annual Report 2021
The
Galapagos
group
An overview of Galapagos,
its strategy and portfolio in 2021
Foundation & Future
THE GALAPAGOS GROUP
Letter from the management
Dear shareholder,
2021 was a year of reflection, resulting in refocused R&D activities and resized spend, as well as
commercial roll-out, with a major effort to launch Jyseleca® throughout Europe.
We made excellent progress with Jyseleca (filgotinib) and successfully completed the process
of becoming Marketing Authorization Holder (MAH) in Europe for our first medicine. Improving
independent
patients’
European biopharma is a major achievement to make that mission a reality for patients suffering
from chronic debilitating conditions.
lives is at the core of what we do, and becoming a fully integrated,
One year after receiving approval for Jyseleca in Europe for the treatment of adults with
moderate to severe rheumatoid arthritis (RA), we secured reimbursement in 14 countries,
including the major markets of Germany, France, Spain,
Italy, and Great Britain. As of
31 December 2021, we reported €14.8 million of Jyseleca sales in Europe out of a total in-market
performance of €25.7 million, supporting confidence in the potential of our filgotinib franchise in
Europe and in our own commercial capabilities.
We also received approval by the European Commission (EC), and most recently by the Medicines
and Healthcare products Regulatory Agency (MHRA) in Great Britain, for a second indication for
Jyseleca for patients suffering from moderate to severe active ulcerative colitis (UC). We are now
progressing full steam ahead with the commercial roll out and Jyseleca is currently on the market
for UC in Germany and the Netherlands, with other European territories to follow in the course
of 2022.
We announced the completion of patient enrollment in the global Phase 3 DIVERSITY study
with filgotinib in Crohn’s Disease (CD), with topline results anticipated in the first half of 2023.
In October, we announced that we will be solely responsible for all development activities for
DIVERSITY and the long-term extension study starting 1 April 2022. Gilead will make a one-
time payment of $15 million to support Galapagos with the remaining DIVERSITY trial costs, and
should the EC grant regulatory approval of filgotinib for the treatment of CD based on data from
the DIVERSITY trial, royalties payable by Galapagos to Gilead will be reduced by 30% across all
filgotinib indications, or 5.6% to 10.5% of net sales in Europe. These royalties are payable as of
2024.
Also for filgotinib, we were pleased to report on the primary endpoint with the MANTA and
MANTA-RAy studies investigating the effect on semen parameters,
indicating that 8.3% of
patients on placebo and 6.7% of patients on filgotinib had a 50% or more decline in sperm
concentration at week 13.
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Differentiated portfolio
Note: filgotinib is approved for RA in EU and Japan, approved for UC in EU and filed for UC in Japan
Due to the unfavorable risk/benefit profile observed by an Independent Data Monitoring
Committee (IDMC) in the Phase 3 study of ziritaxestat (GLPG1690) in idiopathic pulmonary
fibrosis (IPF), we had to discontinue further development of this program. This not only was a
major setback for Galapagos but most importantly for patients suffering from this terrible disease
for which current treatment options remain limited.
In 2021, we also made important progress across our broader inflammation pipeline, most notably
with our TYK2 and SIKi programs. We observed clinical activity with our TYK2 inhibitor GLPG3667 in
a Phase 1b study in psoriasis (Pso), and we are currently finalizing a Phase 1 dose escalation study
in healthy volunteers. We reported results from the first patient studies of our SIKi program with
SIK2/3 inhibitor GLPG3970. The biological activity observed in the studies in Pso and UC highlights
the pioneering role we are playing to unravel the role of SIKi in inflammation, and support further
development of our SIKi portfolio. We are currently working on a set of follow-up SIKi compounds with
improved pharmacology and selectivity profiles, and plan to select a preclinical candidate to move
into a healthy volunteer study this year.
Beyond inflammation, we completed patient recruitment in our MANGROVE Phase 2 trial with
GLPG2737, a novel Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) inhibitor, in
autosomal dominant polycystic kidney disease (ADPKD), with results expected in 2023.
I am very proud of our committed teams for working tirelessly to bring novel mode of action
medicines to patients, and now that my tenure at the helm of this company is drawing to an end, I
could not be more honored to hand over the baton to Dr. Paul Stoffels on 1 April.1 As a co-founder
and board member in the early years, Paul has a keen understanding of our roots as well as who
we are today. I strongly believe that Paul’s strategic and inspirational leadership, along with his deep
knowledge of both the industry and Galapagos, make him the right next CEO to deliver tremendous
value to all stakeholders, including investors, shareholders, and patients.
1
Acting via Stoffels IMC BV
5
Galapagos NV Annual Report 2021
OAIBDADPKDJAK1JAK1/TYK2TYK2SIK3SIKiChitinaseIPFUndisclosedSIK2/3CFTRfilgotinib‘0555‘3121‘3667‘4399PCC‘4716‘4586‘4605‘2737Phase 2Phase 1ClassAssetPhase 3FilingApprovalCDUCRA & UCInflammationFibrosisKidney disease THE GALAPAGOS GROUP
R&D
In the field of inflammation:
We received approval in Europe from the EC for filgotinib 200mg (Jyseleca) for the treatment
of moderate to severe UC
Gilead announced that NICE recommended filgotinib for reimbursement for moderate to
severe RA patients in Great Britain
We initiated the FILOSOPHY Phase 4 study with filgotinib in RA
We and Gilead announced interim data on the MANTA and MANTA-RAy studies. 8.3% of
patients on placebo and 6.7% of patients on filgotinib had a 50% or more decline in sperm
concentration at week 13; these results are being shared with regulatory authorities
We announced completion of patient enrollment for DIVERSITY Phase 3 study with filgotinib
in CD including a 10-week induction phase, followed by a 47-week maintenance phase.
Topline results are anticipated in the first half of 2023
We reported encouraging exploratory data from the DIVERGENCE 2 trial with filgotinib in
fistulizing CD
We observed activity with TYK2 inhibitor GLPG3667 in Pso, with a generally safe and well
tolerated profile, and are currently completing a dose escalation study in healthy volunteers
We reported on biological activity with SIK2/3 inhibitor GLPG3970 in inflammation, and more
particularly in the CALOSOMA Phase 1b study in Pso and the SEA TURTLE Phase 2a study
in RA. Following the first read-outs
in UC. We did not see activity in the LADYBUG trial
with GLPG3970, we decided to terminate the TAPINOMA Phase 1b study with GLPG3970
in systemic lupus erythematosus due to slow recruitment in this trial and low likelihood of
success
We published the SELECTION Phase 3 data (Feagan etal. 2021) in TheLancet and the FINCH
1 Phase 3 data (Combe et al. 2021) and FINCH 3 Phase 3 data (Westhovens et al. 2021) in the
Annals of the Rheumatic Diseases
In fibrosis:
We discontinued development of ziritaxestat, GLPG1690, in the ISABELA Phase 3 program in
IPF
Other clinical programs:
We announced the full recruitment for the MANGROVE Phase 2 trial with investigational CFTR
inhibitor GLPG2737 in patients with ADPKD
Corporate:
On 4 January 2021 we sold fee-for-service business Fidelta to Selvita for a total of
€37.1 million
We raised €3.3 million from subscription right exercises
We announced an extension of the lock-up period for Gilead’s current shares (currently
25.49%) in Galapagos to 2024
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
We announced the planned departure of Piet Wigerinck, our Chief Scientific Officer, and the
planned retirement of Onno van de Stolpe, founder and Chief Executive Officer
We received the second installment of €75 million from Gilead in Q2, following payment of
an earlier installment of €35 million in January 2021, included under the revised filgotinib
agreement as announced in December 2020
We announced that we will assume operational and financial responsibility for the ongoing
DIVERSITY clinical study in CD with filgotinib and the long-term extension study. Gilead will
make a one-time payment of $15 million to Galapagos to support the costs of the DIVERSITY
clinical program, and if the EC grants regulatory approval based on data from the DIVERSITY
trial, royalties payable by Galapagos to Gilead will be reduced by 30% across all filgotinib
indications
As MAH for Jyseleca in RA and UC, we own full commercialization responsibilities across
Europe
Post-period events:
We are finalizing the Phase 1 study with SIK3 inhibitor GLPG4399 in healthy volunteers
On 11 February 2022, EMA announced that
its Pharmacovigilance Risk Assessment
Committee (PRAC) started an article 20 specific pharmacovigilance procedure to investigate
the safety data for all JAK inhibitors following recent results from the ORAL surveillance
study with tofacitinib (Xeljanz®, Pfizer) as well as the data from an observational study with
baricitinib (Olumiant®, Eli Lilly)
We appointed Dr. Paul Stoffels1 as Chief Executive Officer and successor for our current CEO
and founder Onno van de Stolpe effective 1 April 2022. Onno will stay on until October 31
2022 as an advisor to hand over his activities and support Paul in specific projects.
We received approval in Great Britain from the MHRA for filgotinib 200mg (Jyseleca) for the
treatment of moderate to severe UC. Gilead anticipates a decision for Jyseleca in UC from the
Japanese authorities in the first half of 2022
We announced Sobi as our third-party partner for the distribution and commercialization of
Jyseleca in Eastern and Central Europe, Portugal, Greece, and the Baltic countries
We decided to terminate the GLIDER Phase 2a study with SIK2/3 inhibitor GLPG3970 in
Sjögren’s disease
2021: Details of the financial results
After the sale of our fee-for-service business (Fidelta) to Selvita on the 4 January 2021 for a total
consideration of €37.1 million, we only have one remaining reporting segment. The results of
Fidelta, including the impact of the 2021 sale, are presented as “Net results from discontinued
operations” in our consolidated income statements for the year 2021 and 2020.
Net revenues from continuing operations
Our net revenues from continuing operations for 2021 amounted to €484.8 million, compared
to €478.1 million in 2020.
1
Acting via Stoffels IMC BV
7
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
We reported net sales of Jyseleca in 2021 amounting to €14.8 million, which reflects the sales
booked by Galapagos after the country-by-country transition from Gilead.
Collaboration revenues amounted to €470.1 million in 2021, compared to €478.1 million last
year. The revenue recognition linked to the upfront consideration and milestone payments in
the scope of the collaboration with Gilead for filgotinib, amounted to €235.7 million in 2021
(€228.1 million in 2020). The revenue recognition related to the exclusive access rights for Gilead
to our drug discovery platform amounted to €230.6 million in 2021 (€229.6 million in 2020).
Additionally we have recognized royalty income from Gilead for Jyseleca for €3.8 million in 2021
(compared to €16.2 million in 2020, which was mainly from income related to upfront payments
from a distribution agreement for the commercial launch of filgotinib in Japan).
Our deferred income balance on 31 December 2021 includes €1.8 billion allocated to our drug
discovery platform that is recognized linearly over 10 years, and €0.6 billion allocated to the
filgotinib development that is recognized over time until the end of the development period.
Results from continuing operations
We realized a net loss from continuing operations of €125.4 million in 2021, compared to a net
loss of €311.0 million in 2020.
We reported an operating loss amounting to €165.6 million in 2021, compared to an operating
loss of €178.6 million in 2020.
Cost of sales related to Jyseleca net sales in 2021 amounted to €1.6 million.
Our R&D expenditure in 2021 amounted to €491.7 million, compared to €523.7 million in 2020.
This decrease was primarily due to the winding down of the programs with ziritaxestat (IPF),
MOR106 (atopic dermatitis), and GLPG1972 (OA) and reduced spend on our other programs.
This was partly offset by costs increases for our filgotinib, Toledo (SIKi) and TYK2 programs, on a
yearly comparison basis.
Our S&M and G&A expenses were respectively €70.0 million and €140.9 million in 2021,
compared to respectively €66.5 million and €118.8 million in 2020. This increase was primarily
due to an increase in personnel costs resulting from an increase in headcount and other
operating expenses mainly driven by the commercial launch of filgotinib in Europe. This increase
was partly offset by higher cost recharges from us to Gilead in the scope of our commercial cost
sharing for filgotinib in Europe.
Other operating income (€53.7 million in 2021 vs €52.2 million in 2020) slightly increased, mainly
driven by higher grant income.
We reported a non-cash fair value gain from the re-measurement of initial warrant B issued to
Gilead, amounting to €3.0 million in 2021 (€3.0 million in 2020), mainly due to the decreased
implied volatility of the Galapagos share price and its evolution between 31 December 2020 and
31 December 2021.
Net other financial income in 2021 amounted to €39.6 million, compared to net other financial
loss of €134.2 million in 2020. Net other financial income in 2021 was primarily attributable to
8
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
€57.2 million of currency exchange gains on our cash and cash equivalents in U.S. dollars, and
to €8.8 million of net interest expenses. The other financial expenses also contained the effect of
discounting our long term deferred income of €9.3 million.
Results from discontinued operations
The net profit from discontinued operations for the year ended 31 December 2021 consisted of
the gain on the sale of Fidelta, our fee-for-services business, for €22.2 million.
Group net results
We reported a group net loss in 2021 of €103.2 million, compared to a net loss of €305.4 million
in 2020.
Cash, cash equivalents and current financial investments
Current financial
investments and cash and cash equivalents totaled €4,703.2 million on
31 December 2021 as compared to €5,169.3 million on 31 December 2020 (including the cash
and cash equivalents included in the assets classified as held for sale).
Total net decrease in cash and cash equivalents and current financial investments amounted to
€466.1 million in 2021, compared to a net decrease of €611.5 million in 2020. This net decrease
was composed of (i) €564.8 million of operational cash burn2, offset by (ii) €6.8 million positive
changes in (fair) value of current financial
investments and €59.9 million of mainly positive
exchange rate differences, (iii) €3.3 million of cash proceeds from capital and share premium
increase from exercise of subscription rights in 2021, and (iv) €28.7 million cash in from disposal
of subsidiaries.
Our balance sheet on 31 December 2021 included R&D incentives receivables from the French
government (Crédit d’Impôt Recherche3), and from the Belgian Government, for a total of
€144.0 million.
Outlook for 2022
Early in 2022, we announced the appointment of Dr. Paul Stoffels1 as successor for founder
and current CEO Onno van de Stolpe, effective 1 April 2022. Paul is widely recognized as an
inspirational industry leader with exceptional R&D as well as global executive experience, with an
outstanding track record of accelerated product development in biotech and pharma through
insightful acquisitions and strategic partnerships.
In 2022, we expect reimbursement decisions in most key European markets for Jyseleca in
UC, and we anticipate our distribution partner Sobi to progress further with reimbursement
discussions for Jyseleca in RA and UC in Eastern and Central Europe, Portugal, Greece, and the
Baltic countries. In Japan, our collaboration partner Gilead expects a decision on the use of
Jyseleca in UC in the first half of 2022.
2
3
1
We refer to note 20 of our consolidated financial statements for an explanation and reconciliation of this alternative
liquidity measure
Crédit d’Impôt Recherche refers to an innovation incentive system underwritten by the French government
Acting via Stoffels IMC BV
9
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Earlier this year, the EMA announced that its Pharmacovigilance Risk Assessment Committee
(PRAC) started an article 20 specific pharmacovigilance procedure to investigate the safety data
for all JAK inhibitors following recent results from the ORAL Surveillance study with tofacitinib4
as well as the data from an observational study with baricitinib5. Following initiation of this
procedure, all JAKi MAHs will be invited to submit evidence and we will continue to work with the
EMA. The European Commission has asked the EMA to give its opinion by 30 September 2022.
Within our broader inflammation portfolio, we expect the read out from a healthy volunteer
Phase 1b trial with JAK1 inhibitor GLPG0555 for application in knee osteoarthritis and from
multiple Phase 1 trials in healthy volunteers. We aim to progress our TYK2 inhibitor GLPG3667
into a Phase 2 program, following the dose escalation Phase 1 study currently being finalized,
also taking into account the current regulatory and competitive landscape for TYK2 as a class. We
aim to advance selected compounds with optimized pharmacology and selectivity from our SIKi
portfolio into the clinic. Within our fibrosis portfolio, we are evaluating the start of a Phase 2 trial
with chitinase inhibitor GLPG4716 in lung fibrosis.
For 2022 we anticipate a further significant reduction of our cash burn and expect to land
between €450 and €490 million. This includes sales for Jyseleca that we anticipate between €65
and €75 million.
We believe our strong cash balance affords us the opportunity to develop our pipeline through
internal as well as externally sourced assets. We expect our scientific expertise, strong leadership,
and growing commercial franchise to propel us forward as we rebuild a differentiated pipeline of
novel mode of action drug candidates to help patients in need of new treatment options.
We want to thank you for your continued support as we took important decisions and actions to
set our foundations for future growth. My 23 years at the helm of this company have been an
incredible journey and I am very pleased that Paul will take over as CEO. Together with the board
and our strong management team, we believe that we can look forward with confidence to the
future of our company.
Respectfully,
Onno van de Stolpe
CEO
4
5
Xeljanz®, Pfizer
Olumiant®, Eli Lilly
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
COVID-19 impact
As the COVID-19 pandemic continues, we continue to innovate to accommodate for the new
situation and minimize the impact to operations. We closely follow local governmental measures
and apply these as appropriate within our organization, guided and supported by our dedicated
COVID-19 task force teams. All
local and global task force teams meet regularly and make
recommendations directly to the COO.
We report the following impacts for 2021:
Staff
In 2021, we continued to follow the strict measures put in place to help prevent the spread
of the COVID-19 virus and protect the physical and mental health of our staff. We rolled
out our global and site-specific business continuity plans and continue to take appropriate
recommended precautions.
During lock-down periods, we arranged for essential tasks to be carried out within our
facilities. Consequently, the majority of our Research staff continues to work from the
office/labs, with periodic exceptions for local lockdowns during which no staff is allowed into
the facilities. For those employees coming to the office, we maintain stringent cleaning and
sanitation protocols, and we strictly respect social distancing policies at all times in order to
minimize risk of exposure.
Based on the learnings from the first year of the pandemic, we piloted and gradually
implemented a hybrid working model in 2021, in locations where the ongoing COVID-19
situation and corresponding local governmental measures permitted to do so.
Additionally, we learned that most of the international travel could be replaced by virtual
meetings, resulting in improved cost efficiency, a better work-life balance, and a reduced
carbon footprint. The positive impact of this forced way-of-working has been retained and
has become part of our corporate travel guidance.
Research portfolio
By prioritizing the most advanced projects very early on, increasing the flexibility of our staff
in the labs within projects, maintaining our hiring efforts as planned, and increasing our
outsourcing, we sustained our research delivery, kept the compound management facility
running at all times, and continued our early drug research and the implementation of new
modalities for target or drug discovery.
The scorecard of the research department objectives shows a similar productivity compared
to previous years, indicating that we were able to minimize the impact, at least on the short
term.
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Development portfolio
We have a business continuity plan for our clinical development programs. We closely
monitor each program in context of the current global and local situation of the pandemic
and the associated specific regulatory,
institutional, government guidance and policies
related to COVID-19. Within the boundaries of these guidances and policies, and in
consultation with our CROs and clinical trial sites, we applied various measures to minimize
the impact of the COVID-19 pandemic on our clinical development programs, with the
primary aim to ensure the safety of our trial participants and to preserve the data integrity
and scientific validity of the trials. These measures were implemented on a case-by-case
basis, tailored to the specific study and country needs at any given time, with specific
attention paid to vulnerable populations and the use of investigational medicines with
immunosuppressive properties. The measures include, amongst others,
increased,
transparent communication to all stakeholders and the direct supply of investigational
medicines to patients. For each clinical trial, we actively monitor and document the impact
of COVID-19 to mitigate the study where necessary and to facilitate the interpretation and
reporting of results.
Filgotinib filing process UC
As of publication of this report, our collaboration partner Gilead had not been informed by
the regulatory agency in Japan of approval timeline delays.
Manufacturing and supply chain
To date, there has been no COVID-19 impact to the commercial supply of filgotinib. All sites
involved in the manufacturing of filgotinib are established sites that currently manufacture
other marketed products and are in good standing with the FDA and are GMP certified.
Galapagos became marketing authorization holder of filgotinib in the European Economic
Area and Great Britain end 2021, and is responsible for manufacturing. The same
manufacturing sites as Gilead continue to supply filgotinib except for secondary packaging
and labelling for which a new vendor has been selected.
Commercial organization
The form of outreach of our commercial teams to physicians and hospitals was impacted
by the COVID-19 pandemic and consequent travel restrictions, and thus became partially
virtual. The teams invested in digital channels as part of the overall commercial build strategy,
and these channels are being utilized during our ongoing commercial launch. Thus far we
note no material impact on the relative competitiveness of our commercial operations due
to travel restrictions, nor has there been an impact of COVID-19 on our ability to engage
in market access discussions. Nevertheless, healthcare systems are under pressure across
Europe, increasing the volatility in reimbursement procedures and potentially reducing the
number of new therapy options initiated by healthcare providers.
12
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
At a glance
Consolidated Key Figures
(thousands of €, if not stated otherwise)
2021
2020
2019
Year ended
Year ended
Year ended
31 December
31 December
31 December
Income statement(*)
Product net sales
14,753
2
-
Collaboration revenues
470,093
478,051
834,901
Cost of sales
R&D expenditure
S, G&A expenses
(1,629)
-
-
(491,707)
(523,667)
(420,090)
(210,855)
(185,225)
(96,959)
Other operating income
53,749
52,207
50,896
Operating profit/loss (-)
(165,596)
(178,632)
368,748
Net financial results
42,598
(131,143)
(220,223)
Taxes
(2,423)
(1,226)
165
Net profit/loss (-) from continuing operations
(125,422)
(311,001)
148,689
Net profit from discontinued operations,
net of tax
Net profit/loss (-)
Balance sheet
22,191
5,565
1,156
(103,231)
(305,436)
149,845
Cash and cash equivalents
2,233,368
2,135,187
1,861,616
Current financial investments
2,469,809
3,026,278
3,919,216
R&D incentives receivables
144,013
135,728
115,356
Assets
5,193,160
5,717,731
6,068,609
Shareholders' equity
2,643,362
2,670,355
2,875,658
Deferred income
Other liabilities
2,364,701
2,809,133
3,000,646
185,097
238,242
192,305
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
(thousands of €, if not stated otherwise)
2021
2020
2019
Year ended
Year ended
Year ended
31 December
31 December
31 December
Cash flow
Operational cash flow/operational
cash burn (-)(**)
Cash flow generated from/used in (-)
(564,840)
(517,404)
3,162,809
operating activities
(503,827)
(427,336)
3,208,617
Cash flow generated from/used in (-)
investing activities
Cash flow generated from/used in (-)
financing activities
541,238
757,288
(3,764,660)
(3,876)
22,040
1,335,751
Increase in cash and cash equivalents
33,535
351,994
779,708
Transfer to current financial investments
-
-
(198,922)
Effect of currency exchange rate fluctuation
on cash and cash equivalents
56,763
(70,539)
(9,966)
Cash and cash equivalents on 31 December
2,233,368
2,143,071
1,861,616
Cash and cash equivalents from
continuing operations
Cash and cash equivalents classified as assets
2,233,368
2,135,187
1,861,616
held for sale
-
7,884
-
Current financial investments on 31 December
2,469,809
3,026,278
3,919,216
Total current financial investments and cash and
cash equivalents on 31 December
4,703,177
5,169,349
5,780,832
Financial ratios
Number of shares issued on 31 December
65,552,721
65,411,767
64,666,802
Basic income/loss (-) per share (in €)
Diluted income/loss (-) per share (in €)
Share price on 31 December (in €)
Total group employees on 31 December
(1.58)
(1.58)
49.22
(4.69)
(4.69)
80.48
2.60
2.49
186.50
(number)(***)
1,309
1,489
1,003
(*) The comparatives of 31 December 2019 have been restated to consider the impact of classifying the Fidelta
business as discontinued operations in 2019.
(**) We refer to note 20 of our consolidated financial statements for an explanation and reconciliation of this
alternative liquidity measure.
(***) The number of employees on 31 December 2020 and on 31 December 2019 included respectively 185 and 158
employees of Fidelta, which has been sold to Selvita on 4 January 2021.
14
Galapagos NV Annual Report 2021
Employees per site
THE GALAPAGOS GROUP
Number of employees Galapagos group
1,309
gender:
education:
750
women
9%
other
27%
PhD
23%
Bachelor
41%
Master
Average age:
43
595
Nationalities:
42
Average years of service:
Employee turnover:
New hires in 2021:
3.74
8.81%
328
Total number of employees includes consultants and temporary staff
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Strategy
Our mission is to develop and commercialize first-in-class medicines based on novel targets to
improve patients’ lives.
Using human primary cells, we discover which proteins (“targets”) play a key role in disease
pathways. We then identify and develop small molecules that are designed to inhibit these
targets, and thereby positively influence the course of the disease. This approach is designed to
address the root cause of the disease rather than just treating symptoms, and has produced a
differentiated pipeline of molecules.
In 2021, we became the official Marketing Authorization Holder (MAH) for Jyseleca in the
European Economic Area (EEA) and Great Britain, realizing our ambition to become a fully
integrated, independent European biopharma. We are committed to pioneering for patients, with
the aim to enrich our product pipeline to address unmet medical needs, both through internal
R&D efforts and externally sourced opportunities.
The key elements of our strategy include:
Maximize and capture the value of our target discovery platform and our differentiated
pipeline based on novel modes of action
We continue to scale-up our target and drug discovery productivity, and as a result of the
strategic revision exercise announced in 2021, we set goals to focus and adjust the overall
risk profile of our clinical pipeline. We also continue to explore additional modalities of
drug therapies, such as PROTACs1 and oligonucleotides, and are actively collaborating with
external research partners to accelerate the innovation process.
Grow our Jyseleca franchise in the European Union and Great Britain
We successfully completed the process of becoming MAH of Jyseleca following the amended
agreement with Gilead announced in December 2020 (see Notes to the consolidated
financial statements) and continue the roll-out of Jyseleca in RA and UC throughout the
European Union and Great Britain. Patient enrollment for DIVERSITY Phase 3 in CD was
completed in October 2021, and we anticipate topline results in the first half of 2023. Gilead
remains responsible for sales outside of Europe and obtained approval for filgotinib in RA in
Japan in 2020 where it is distributed by co-promotion partner Eisai. Gilead also submitted the
application for approval of filgotinib in UC in Japan and anticipates a decision for approval in
the first half of 2022.
Deploy stringent cost discipline and operational excellence to maintain a strong balance
sheet and execute to internal and externally sourced opportunities
Following a strategic review of operations in March 2021, we initiated a cost savings program
of €150 million on a full year basis, where more than 50% of these targeted savings were
realized in 2021. Meanwhile we diligently evaluate business development opportunities to
strengthen our R&D engine and product pipeline.
1
Proteolysis Targeting Chimeras
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Build long-term value and accelerate our pipeline with our collaboration partner Gilead
In July 2019 we and Gilead entered into a strategic R&D collaboration, giving Gilead access
to our innovative portfolio of compounds and our drug discovery platform, in return for a
$3.95 billion upfront payment and a $1.5 billion equity investment (including the exercise of
warrant A). Gilead is subject to a 10-year standstill, securing our long-term independence,
with a lock-up of the full 25.49% of outstanding shares currently held by Gilead until
22 August 2024.
We strongly believe that the long-term collaboration with Gilead is mutually beneficial: we
gain access to Gilead’s extensive experience in drug development and commercialization,
and Gilead has access to our platform and pipeline, with option rights to our current
and future programs outside Europe. If Gilead opts in, the program is co-developed, and
Galapagos and Gilead share all costs.
Following the amendment in 2020 of the arrangement for the commercialization and
development of filgotinib, we assumed sole responsibility for commercialization of Jyseleca in
Europe and for the clinical development for the majority of the ongoing trials with filgotinib.
For further details: see the Notes to the consolidated financial statements.
Going concern statement
To date, we have incurred significant operating losses, which are reflected in the balance sheet
showing €367.2 million accumulated losses as at 31 December 2021. We realized a consolidated
net loss of €103.2 million for the year ended 31 December 2021. Our existing current financial
investments and cash and cash equivalents of €4,703.2 million at 31 December 2021 will enable
us to fund our operating expenses and capital expenditure requirements at least for the next 12
months. The supervisory board is also of the opinion that additional financing could be obtained,
if required. Taking this into account, as well as the potential developments of our drug discovery
and development activities, the supervisory board is of the opinion that it can submit the financial
statements on a going concern basis. Whilst our current financial investments and cash and cash
equivalents are sufficient at least for the next 12 months, the supervisory board points out that if
the R&D activities go well, we may seek additional funding to support the continuing development
of our products or to be able to execute other business opportunities.
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Risk management and internal control
Risk management is embedded in our strategy and is considered important for achieving our
operational targets.
To safeguard the proper implementation and execution of the group’s strategy, our management
board has set up internal risk management and control systems within Galapagos. The
supervisory board has delegated an active role to the audit committee members to monitor
the design, implementation and effectiveness of these internal risk management and control
systems. The purpose of these systems is to manage in an effective and efficient manner the
significant risks to which Galapagos is exposed.
The internal risk management and control system is designed to ensure:
the careful monitoring of the effectiveness of our strategy
Galapagos’ continuity and sustainability, through consistent accounting, reliable financial
reporting and compliance with laws and regulations
our focus on the most efficient and effective way to conduct our business
We have defined our risk tolerance on a number of internal and external factors including:
financial strength in the long run, represented by revenue growth and a solid balance sheet
liquidity in the short run; cash
business performance measures; operational and net profitability
scientific risks and opportunities
dependence on our alliance partners
compliance with relevant rules and regulations
reputation
The identification and analysis of risks is an ongoing process that is naturally a critical component
of internal control. On the basis of these factors and Galapagos’ risk tolerance, the key controls
within Galapagos will be registered and the effectiveness will be monitored. If the assessment
shows the necessity to modify the controls we will do so. This could be the situation if the external
environment changes, or the laws or regulations or the strategy of Galapagos change.
The financial risks of Galapagos are managed centrally. The finance department of Galapagos
coordinates the access to national and international financial markets and considers and
manages continuously the financial risks concerning the activities of the group. These relate
to the following financial markets risks: credit risk, liquidity risk, currency and interest rate risk.
Our interest rate risk is limited because we have nearly no financial debt. In case of decreasing
interest rates we will face a reinvestment risk on our strong cash position. The group does not
buy or trade financial instruments for speculative purposes. For further reference on financial risk
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
management, see note 33 of the notes to the consolidated financial statements. We also refer to
the Risk factors section of the annual report for additional details on general risk factors.
The company’s internal controls over financial reporting are a subset of internal controls and
include those policies and procedures that:
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with IFRS as adopted by the EU, and that
our receipts and expenditures are being made only by authorized persons
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect on the financial
statements
Our internal control over financial reporting includes controls over relevant IT systems that have
an impact on financial reporting including accuracy and completeness of our account balances.
Since the company has securities registered with the U.S. Securities and Exchange Commission
(SEC) and is a large accelerated filer within the meaning of Rule 12b-2 of the U.S Securities
Exchange Act of 1934, the company needs to assess the effectiveness of internal control over
financial reporting and provide a report on the results of this assessment.
In 2021 management has reviewed its internal controls over financial reporting based on criteria
established in the Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) and engaged an external advisor
to help assess the effectiveness of those controls.
As described in Section 404 of the U.S. Sarbanes-Oxley Act of 2002 and the rules implementing
such act, we will
include the management and the statutory auditor’s assessment of the
effectiveness of internal control over financial reporting in our annual report on Form 20-F, which
is expected to be filed with the SEC on or around the publication date of the present annual
report.
19
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
The Galapagos share
Galapagos NV (ticker: GLPG) has been listed on Euronext Amsterdam and Brussels since
6 May 2005 and on the Nasdaq Global Select Market since 14 May 2015. Galapagos NV forms
part of the Bel20 index (top 20 listed companies) on Euronext Brussels, the AMX Index
(Amsterdam Midcap-index) on Euronext Amsterdam, and the NBI (Nasdaq Biotechnology Index)
on Nasdaq in New York.
The Galapagos share in 2021
120
110
100
90
80
70
60
50
40
30
20
10
0
01.01.2021
01.04.2021
01.07.2021
01.10.2021
31.12.2021
GLPG.AM (in EUR)
GLPG.US (in USD)
In 2021, the average daily trading volume on Euronext was 436,605 shares and €26.1 million
turnover. The daily trading volume on Nasdaq in 2021 was 279,359 ADSs and $19.5 million
turnover.
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Galapagos vs Next Biotech Index in 2021
1.4
1.2
1
0.8
0.6
0.4
0.2
0
01.01.2021
01.04.2021
01.07.2021
01.10.2021
31.12.2021
GLPG (Euronext)
Next Biotech Index
Galapagos vs Nasdaq Biotechnology Index in 2021
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
01.01.2021
01.04.2021
01.07.2021
01.10.2021
31.12.2021
GLPG (Nasdaq)
Nasdaq Biotechnology Index
21
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Investor relations activities
In 2021 we attracted additional coverage from sell-side analysts. Currently, 17 analysts cover the
Galapagos stock.
Our IR team presented at 30 (virtual) conferences in 2021 in Europe and the U.S. Several
broker-organized and self-organized roadshows and virtual meetings were held throughout the
U.S., Europe, and Asia, during which we held approximately 600 meetings.
We organized webcasts to present our 2020 Full Year, and our 2021 Q1, Half Year, and Q3
results, and certain conference presentations.
The main topics of discussion with investors in 2021 included the launch of Jyseleca (filgotinib) in
RA in Europe and the approval of Jyseleca for the treatment of UC by the European Union, the
collaboration with partner Gilead (including the extension of the lock-up period), the refocusing
of our pipeline and rightsizing of our operations, the early clinical activity observed with our SIK
program with SIK2/3 inhibitor GLPG3970, the positive topline results with our selective TYK2
inhibitor GLPG3667, and the planned departure of our CSO and planned retirement of our CEO
and founder.
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Overview statutory results of Galapagos
NV
This overview only concerns the non-consolidated statutory results of Galapagos NV. These
results are part of the consolidated results as discussed in the Letter from the management.
Galapagos NV’s operating income in 2021 amounted to €916.0 million compared to
€1,037.0 million in 2020. This decrease is due to a lower turnover for €55.4 million, primarily due
to decreased milestone revenues, upfront payments and royalties related to the collaboration
agreement with Gilead. There was also a decrease due to internally generated intangible assets
– being capitalized R&D expenses – which contributed by €68.1 million less to operating income
than previous year. Other operating income amounted to €18.5 million, including €7.3 million
of grants recognized for R&D projects and €9.0 million recuperation of withholding taxes for
scientists.
The operating costs of 2021 amounted to €1,107.7 million compared to €1,146.0 million in 2020.
Services and other goods decreased substantially to €500.0 million compared to €543.0 million
in 2020, primarily due to decreased internal and external subcontracting for our preclinical
studies and clinical trials as well as decreased fees for insourced personnel.
Material purchases increased slightly from €10.3 million in 2020 to €13.1 million in 2021.
Personnel costs in 2021 amounted to €70.4 million compared to €59.9 million in 2020. The
number of employees at Galapagos NV at the end of 2021 amounted to 460 as compared to 508
at the end of 2020, excluding insourced personnel. The average number of FTE in 2021 however
increased to 487, compared to 436 in 2020.
Depreciation decreased to €401.8 million in 2021, compared to €467.8 million in 2020, and
related primarily to amortization of R&D expenses.
Galapagos NV’s 2021 financial income increased to €85.8 million compared to €25.8 million in
2020, while financial costs decreased to €28.1 million compared to €139.9 million in 2020. This
can mainly be explained by higher currency exchange gains on U.S. dollar in 2021. Non-recurring
finance income in 2021 consisted of €33.5 million of gain on sale of subsidiaries. Non-recurring
finance cost in 2021 consisted of impairment on financial assets.
Tax income recorded in 2021 of €20.2 million as compared to €21.6 million tax income in 2020,
related to tax incentives for investments in intangible fixed assets.
Galapagos NV capitalizes its incurred R&D expenses to the extent that the costs capitalized do
not exceed a prudent estimate of their value in use or their future economic benefits for the
entity. The ability to recover the capitalized amounts takes into account assumptions (e.g. future
peak sales, market share, sale prices, attrition rates regarding the successful completion of the
different R&D phases) which have a highly judgmental nature and depend on the outcome of
uncertain factors which are beyond the control of the entity (e.g. test results). The achievement of
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
these assumptions is critical and may impact the recoverability of the amounts capitalized. R&D
expenses capitalized are fully amortized in the year in which they are capitalized.
Investments in fixed assets in 2021 amounted to €10.5 million, excluding the internally generated
assets. They consisted mainly of investments in intangible assets, being a license payment and
software, as well of costs for building improvements, new laboratory and IT equipment.
Non-current and current other receivables amounted to respectively €92.5 million and
€116.6 million and included the receivable for tax incentives amounting to respectively
€92.5 million and €6.6 million in 2021, compared to other receivables for tax incentives of
€78.3 million and €5.5 million in 2020.
Galapagos NV’s cash position at the end of 2021 amounted to €4,681.3 million.
The non-consolidated annual accounts of Galapagos NV which we submit for your approval were
prepared in accordance with Belgian accounting rules as well as with the legal and regulatory
requirements. They show a negative result. The financial year 2021 closed with a loss of
€92.7 million compared to a loss of €196.0 million in 2020. The non-consolidated annual
accounts of Galapagos NV show accumulated losses of €369.2 million as at 31 December 2021;
we refer to the Going concern statement for justification for the application of the valuation
rules under the going concern assumption.
In 2021, Galapagos NV did not make use of financial instruments.
24
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
Disclaimer and other information
This report contains all information required by Belgian law.
Galapagos NV is a limited liability company organized under the laws of Belgium and has its
registered office at Generaal De Wittelaan L11 A3, 2800 Mechelen, Belgium. Throughout this
report, the term “Galapagos NV” refers solely to the non-consolidated Belgian company and
references to “we,” “our,” “the group” or “Galapagos” include Galapagos NV together with its
subsidiaries.
This report is published in Dutch and in English. Galapagos is responsible for the translation and
conformity between the Dutch and English versions. In case of inconsistency between the Dutch
and the English versions, the Dutch version shall prevail.
This document is the PDF version of the report, and is a translation of the official Dutch language
version in the European single electronic format (ESEF) of the Annual Report 2021. The official
Dutch language ESEF version of the report is available on our website (www.glpg.com). Please
note that the official ESEF version takes precedence over the PDF version.
This report, including the statutory financial statements of Galapagos NV, is available free of
charge and upon request to be addressed to:
Galapagos NV
Investor Relations
Generaal De Wittelaan L11 A3 2800 Mechelen
Belgium
Tel: +32 15 34 29 00
E-mail: ir@glpg.com
A digital version of this report, including the statutory financial statements of Galapagos NV, is
available on our website, www.glpg.com.
We will use reasonable efforts to ensure the accuracy of the digital version, but do not assume
responsibility if inaccuracies or inconsistencies with the printed document arise as a result of
any electronic transmission. Therefore, we consider only the printed version of this report to be
legally valid. Other information on our website or on other websites does not form a part of this
report.
As a U.S. listed company, we are also subject to the reporting requirements of the U.S. Securities
and Exchange Commission, or SEC. An annual report will be filed with the SEC on Form 20‑F. The
Form 20‑F is available in the SEC’s EDGAR database (https://www.sec.gov/edgar.shtml) and a
link thereto is posted on our website.
With the exception of filgotinib’s approval for the treatment of (i) rheumatoid arthritis by the
European Commission, Great Britain’s Medicines and Healthcare products Regulatory Agency
and the Japanese Ministry of Health, Labour and Welfare, and (ii) ulcerative colitis by the
25
Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
European Commission and Great Britain’s Medicines and Healthcare products Regulatory
Agency, our drug candidates mentioned in this report are investigational; their efficacy and safety
have not been fully evaluated by any regulatory authority.
Jyseleca® is a trademark of Galapagos NV and Gilead Sciences, Inc. or its related companies.
Forward-looking statements
This report contains "forward-looking statements", all of which involve certain risks and
uncertainties. When used in this report, the words “believe,” “anticipate,” “expect,” “intend,” “plan,”
“seek,” “estimate,” “may,” “will,” “could,” “stand to,” “continue,” "further," "encouraging," "aim," and
similar expressions are intended to identify forward-looking statements. Forward-looking
statements contained in this report include, but are not limited to, statements made in the
“Letter from the management”, statements made in the section captioned “Outlook for 2022”,
statements regarding guidance from management, including about the strategic re-evaluation
and of the expected operational cash burn during financial year 2022, statements regarding
expected financial results, statements regarding the amount and timing of potential future
milestones, opt-in and/or royalty payments by Gilead, Galapagos’ strategic R&D ambitions and
potential changes of such ambitions, statements regarding our expectations of commercial
sales of filgotinib, statements regarding the global R&D collaboration with Gilead for the
commercialization and development of
filgotinib and the transition of European
commercialization rights for filgotinib to us, statements regarding the expected timing, design
and readouts of ongoing and planned clinical trials (i) with filgotinib in RA, UC and CD, including
the MANTA/MANTA-RAy trials, (ii) with GLPG3667 in Pso and UC, (iii) GLPG3312, GLPG3970 and
GLPG4399 in inflammation, (iv) GLPG2737 in ADPKD, (v) GLPG0555 in OA, (vi) GLPG3121 in IBD,
(vii) GLPG4586 and GLPG4605 in fibrosis and (viii) GLPG4716 in lung fibrosis, statements related
to the EMA's planned safety review of JAK inhibitors used to treat certain inflammatory disorders,
including filgotinib, initiated at the request of the European Commission (EC) under article 20 of
Regulation (EC) No 726/2004, statements regarding interactions with regulatory authorities, the
timing or likelihood of additional regulatory authorities’ approval of marketing authorization for
filgotinib for RA, UC or any other indication, including the IBD indication for filgotinib in Europe,
Japan, and the U.S. and UC indication for filgotinib in Japan, and the U.S., statements regarding
the timing or likelihood of pricing and reimbursement interactions for filgotinib, statements
regarding the build-up of our commercial organisation for filgotinib, statements regarding the
expected impact of COVID-19, and statements regarding our strategy, business plans and focus.
We caution the reader that forward-looking statements are based on management's current
expectations and beliefs, and are not guarantees of future performance. Forward-looking
statements are subject to a number of known and unknown risks, uncertainties and other
factors which might cause our actual results, financial condition and liquidity, performance or
achievements, or the development of the industry in which we operate, to be materially different
from any historic or future results, financial conditions, performance or achievements expressed
or implied by such forward-looking statements, including, without limitation, the risk that one
or more assumptions, beliefs or expectations underlying management's guidance regarding
our 2022 revenues, operating expenses, and financial results may be incorrect (including one
or more of its assumptions underlying its expense expectations), risks related to the inherent
uncertainties associated with competitive developments, clinical trial, product development
activities and regulatory approval requirements (including that data from our clinical research
programs in rheumatoid arthritis, Crohn’s disease, ulcerative colitis, inflammatory bowel disease,
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Galapagos NV Annual Report 2021
THE GALAPAGOS GROUP
lung fibrosis, idiopathic pulmonary fibrosis, osteoarthritis, other inflammatory indications and
kidney disease may not support registration or further development of our product candidates
due to safety, efficacy, or other reasons, including ziritaxestat for IPF, systemic sclerosis or any
other indication), risks related to our reliance on collaborations with third parties (including, but
not limited to, our collaboration partner Gilead), risks related to completing the transition of
European rights to filgotinib from Gilead to us, the risk that our projections and expectations
regarding the commercial potential of filgotinib and any other product candidates may be
inaccurate, risks related to continued regulatory review of filgotinib following approval by relevant
regulatory authorities and the EMA's planned safety review of JAK inhibitors used to treat certain
inflammatory disorders,
including the risk that the EMA and/or other regulatory authorities
determine that additional non-clinical or clinical studies are required with respect to filgotinib,
the risk that the EMA may require that the marketing authorization for filgotinib in the EU be
amended, the risk that the EMA may impose JAK class-based warnings, and the risk that the EMA’s
planned safety review may negatively impact acceptance of filgotinib by patients, the medical
community, and healthcare payors, the risk that Galapagos’ expectations regarding the costs
and revenues associated with the transfer of European commercialization rights to filgotinib
may be incorrect, and risks relating to the impact of the COVID-19 pandemic. A further list
and description of these risks, uncertainties and other risks can be found in our Securities and
Exchange Commission filing and reports, including in our most recent annual report on Form
20‑F filed with the Security and Exchange Commission, or SEC, and our subsequent filings and
reports filed with the SEC. We also refer to the “Risk Factors” section of this report. 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. We expressly disclaim any obligation to update any such forward-looking statements
in this document to reflect any change in our expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based or that may affect the
likelihood that actual results will differ from those set forth in the forward-looking statements,
unless specifically required by law or regulation.
27
Galapagos NV Annual Report 2021
R&D
Research &
Development
Foundation & Future
RESEARCH & DEVELOPMENT
Our broad pipeline and innovative drug
discovery engine
We discover and develop small molecule medicines with novel modes of action, several of which
are currently in clinical development in multiple diseases with high unmet medical need. Our
highly flexible discovery platform is applicable across many therapeutic areas.
Having achieved approval in the European Union, Great Britain, and Japan for our first ever
medicine in RA, and in the European Union and Great Britain in UC, we remain highly committed
to progressing our pipeline of drug candidates to address unmet medical needs and improve the
lives of millions. We refocused our product portfolio by critically examining the risk profile and
breadth of the pipeline.
Our differentiated clinical pipeline includes: 1) preferential
JAK1 inhibitor filgotinib, which is
approved for the treatment of RA in the European Union, Great Britain, and Japan, approved
for the treatment of UC in the European Union and Great Britain and submitted for approval in
UC in Japan, and currently in a Phase 3 trial in CD; 2) GLPG3667, a TYK2 inhibitor which showed
activity in a Phase 1b study in Pso in 2021; 3) GLPG4399, a SIK3 inhibitor currently in Phase 1; 4)
GLPG4716, a chitinase inhibitor in-licensed from OncoArendi, for which we anticipate to start a
Phase 2 study in lung fibrosis; and 5) GLPG2737, a CFTR-inhibitor, currently in Phase 2 in ADPKD.
In both our inflammation and fibrosis portfolios, we have multiple novel mechanism of action
candidates in early research. These programs are almost exclusively based on inhibiting targets
which were identified using our proprietary target discovery platform.
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Galapagos NV Annual Report 2021
RESEARCH & DEVELOPMENT
Below is an overview of our current key pipeline assets:
Our clinical pipeline
Note: filgotinib is approved for RA in EU and Japan, approved for UC in EU and filed for UC in Japan
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Galapagos NV Annual Report 2021
OAIBDADPKDJAK1JAK1/TYK2TYK2SIK3SIKiChitinaseIPFUndisclosedSIK2/3CFTRfilgotinib‘0555‘3121‘3667‘4399PCC‘4716‘4586‘4605‘2737Phase 2Phase 1ClassAssetPhase 3FilingApprovalCDUCRA & UCInflammationFibrosisKidney disease RESEARCH & DEVELOPMENT
Versatile target discovery platform
Our target discovery platform provides a significant and substantial competitive advantage as it:
closely mimics the in vivo situation through the use of primary human cells with a relevant
trigger and readout for a specific disease phenotype;
identifies possible points to intervene in a disease pathway by suppressing the expression of
an individual protein in these pathways; and
enables us to rapidly analyze all of the druggable and non-druggable genes and select
pharmaceutically tractable protein targets directly by their ability to regulate key disease
biology.
A proof of success of this unique approach is demonstrated with filgotinib which acts on
preferential JAK1, a novel target which role in a specific disease was discovered by us using our
discovery platform.
The human genome consists of tens of thousands of genes which code for the proteins that
make up the human body. Nearly all chronic diseases and disorders are caused by a disruption
in the normal function of certain proteins. The main goal of the biopharma industry is to
discover and develop molecules that alter the activity or expression of these proteins so that
normal function returns and the cause of the disease is minimized or eliminated. One of the
main obstacles in discovering new drugs is to understand exactly which of the body’s tens of
thousands of proteins play a key role in a particular disease. Once these proteins are discovered,
they become targets for drug design. Finding these targets is one of the critical steps in the drug
discovery process. Our approach to target discovery is unique as our discovery platform focuses
on target identification using primary human cells, and incorporates patient data and pathway
screening early on, which we believe is the best way to study the effect that a protein might have
on the disease in the human body.
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Galapagos NV Annual Report 2021
RESEARCH & DEVELOPMENT
To study proteins in human cells, we take advantage of the distinctive properties of viruses in
combination with RNA interference. The virus particle has the capability to infect almost every
type of human cell. The virus particles we work with have been engineered to act as a shuttle
vehicle, allowing the delivery of specific pieces of DNA into human cells. Additionally, these viruses
cannot replicate in the human cells they infect and do not interfere with the processes in the
cell. We engineered the viruses to carry small pieces of DNA, specific for individual human genes.
When the virus enters the cell, this piece of DNA leads to the production of a short sequence of
RNA that is processed in the cell to become “short interfering RNA,” or siRNA, which specifically
interferes with the mRNA of the protein it was designed for. As a result, the cells block, or “knock-
down,” the production of a certain protein and determine its impact on restoring normal function.
Our drug discovery research is based on the targets discovered using this technology. We started
by focusing on 6,000 human genes that belong to the small molecules druggable genome. We are
in the process of expanding our expertise with novel technologies such as oligonucleotide-based
techniques (antisense (AS) or siRNA) and degrader approaches (Proteolysis Targeting Chimeras
or PROTACs). These additions enable us to go broader and explore a broader set, coming closer
to the total of 20,000 protein-coding genes. Once a target is validated, we will use the most
suitable method to develop a potential therapeutic drug.
DNA
RNA
,"#
Proteins
Transcription
CRISPR
gene therapy
Translation
oligonucleotides
small molecules
Modulation
small molecules
peptides
antibodies
cell therapy
Degradation
PROTACS
small molecules
In small molecule drug discovery, an assay developed to assess the activity of the target is
subjected to large collections of chemical small molecules allowing the identification of chemical
structures that interact with the target to block or activate its activity. These chemical structures
are then modified to obtain a preclinical candidate, and upon successful optimization and
preclinical testing in animal models, the product candidate is tested in humans. Other
technologies to modulate relevant targets, such as oligonucleotides or PROTACs, are being
explored. In both cases the result is the removal of the target from the cells leading to the
prevention of its disease-contributing effects. Based on the properties of the target and its
cellular location, one or more modalities are selected and developed.
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Galapagos NV Annual Report 2021
RESEARCH & DEVELOPMENT
This discovery approach provides starting points for the discovery and development of drugs
with new modes of action. Since 2009, we have generated 49 preclinical candidates. Of these, 24
have entered first-in-human clinical development, 18 of which are believed to have novel modes
of action, and 15 entered into patient studies.
In addition to our pipeline of molecules in the clinic, we have multiple discovery programs
advancing toward clinical development.
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Galapagos NV Annual Report 2021
49151824preclinical candidatesentered clinicnovel modes of actionnovel modes of action in patient studies RESEARCH & DEVELOPMENT
Our inflammation franchise
Our first approved medicine
In 2021, we made significant progress with our Jyseleca (filgotinib) franchise. In September, we
celebrated Jyseleca’s first year on the market following the approval for the treatment of adult
patients with moderate to severe active RA in the European Union, Great Britain, and Japan.
Following the amended agreement with Gilead from late 2020, we successfully completed the
transfer of commercial activities from Gilead, and we are the proud MAH of Jyseleca in the
European Economic Area (EEA) and Great Britain since December 2021. In addition, filgotinib is
now also approved in the European Union and Great Britain for the treatment of adult patients
with moderate to severe UC, adding a second indication for filgotinib.
After years of hard work by so many, we are very excited to bring a new treatment option to
patients living with RA and UC throughout Europe.
The market for anti-inflammatory drugs in Europe is considerable:
it is estimated that the
inflammation market today in the five largest European markets is worth approximately
€6.1 billion, with about 50% of the current market going to RA therapies and about 50% to UC
and CD combined:
EU5 inflammation market in 2021, €B
≈3.3
RA
RA: rheumatoid arthritis CD: Crohn’s disease UC: ulcerative colitis
Source: RA (DRG 2021), IBD (source range estimation from DRG, Pharma Intelligence, IQVIA 2021). All biologics and
1
tsDMARDs.
It is our ambition that by the second half of this decade, Jyseleca could generate peak sales of
~€500 million in RA, UC, and CD in Europe, targeting an 8 – 12% share of the total estimated
market for RA, UC, and CD in the five largest markets in Europe.
1
tsDMARDs: targeted synthetic disease-modifying antirheumatic drugs
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Galapagos NV Annual Report 2021
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Jyseleca in RA
RA is a chronic autoimmune disease that affects more than three million patients in the United
States and Europe. RA is characterized by inflammation and degeneration of the joints. Patients
suffer from pain, stiffness, and restricted mobility due to a persistent inflammation of multiple
joints, ultimately resulting in irreversible damage of the joint cartilage and bone. The current
market for RA treatments in the EU5 is approximately €3.3 billion, with 60% of patients treated
with advanced therapies, including injectables, biological therapies and tsDMARDS.
Despite progress in the treatment of RA, there remains a considerable unmet need as sustained
remission is rare.1
Oral therapies targeting the Janus kinase (JAK) signaling pathway are approved to treat
inflammatory diseases.
In 2003, we discovered JAK1 as a novel, differentiated target in an
inflammation target discovery assay and subsequently developed filgotinib as a novel small
molecule inhibitor with preferential selectivity for JAK1.
Within the commercial space of the RA market in the EU5, we observe an expanding market share
for JAK inhibitors, compared to anti-TNF and other biologics. To date there are 4 JAK inhibitors
approved for the treatment of RA in EU5, including Jyseleca as a JAK1 preferential inhibitor. The
growth of the JAK class can be seen in both the total and dynamic (switchers and naïve patients)
market share, as shown in the figure below.
Expanding JAKi market in EU5
28%
26%
26%
10%
14%
16%
63%
60%
58%
23%
18%
59%
Dec'21
22%
19%
21%
20%
17%
18%
21%
26%
59%
61%
59%
57%
Dec'21
Dec'18
Dec'19
Dec'20
Dec'21
Dec'18
Dec'19
Dec'20
Dec'21
Anti TNF
JAKi
Other biologics
Anti TNF
JAKi
Other biologics
Source: Therapy Watch, Q4 2021 (6-month average)
1
Chen Y, et al. Clin Rheumatol. 2019 Mar;38(3):727-738. doi: 10.1007/s10067-018-4340-7. Epub 2018 Oct 19.
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Regulatory approvals of Jyseleca in RA
In September 2020, Jyseleca (filgotinib 200mg and 100mg) obtained approval in European Union,
Great-Britain, and Japan for the treatment of adult patients with moderate to severe active RA.
The European Summary of Product Characteristics for filgotinib, which includes contraindications
and special warnings and precautions, is available at www.ema.europa.eu. The interview form
from the Japanese Ministry of Health, Labour and Welfare is available at www.info.pmda.go.jp.
The individual Great Britain and Northern Ireland Summary of Product Characteristics can be
found
at www.medicines.org.uk/emc and www.emcmedicines.com/en-GB/
northernireland respectively.
In 2020, Gilead received a Complete Response Letter (CRL) from the U.S. FDA for the New Drug
Application (NDA) for filgotinib. Consequently, Gilead decided not to advance with resubmission
in the U.S. for approval of filgotinib as a treatment for RA.
Commercialization of Jyseleca in RA
In 2021, we took full ownership of the manufacturing and commercialization of Jyseleca in Europe
and became MAH in 27 European countries, Iceland, Norway, and Liechtenstein. The medicine
is now reimbursed in 14 countries, including the major markets of Germany, France, Spain, Italy,
and Great Britain. In Central and Eastern Europe, Portugal, Greece and the Baltic countries,
our partner Sobi is responsible for the distribution and commercialization. The graphic below
represents the reimbursement progress throughout Europe since approval in September 2020.
See details on the revised Gilead collaboration on filgotinib in the Notes to the consolidated
financial statements.
Jyseleca reimbursement in RA
Reimbursed (14 countries)
Procedures ongoing
Pending submission
Eastern and Central Europe, Portugal, Greece, Baltic countries partnered with Sobi
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Galapagos NV Annual Report 2021
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Following the amended agreement, Gilead remains responsible for Jyseleca outside of Europe,
including in Japan where Jyseleca is approved in RA and is co-marketed with Eisai.
Safety and efficacy in the filgotinib RA development program
Filgotinib has shown favorable results in terms of onset of action, efficacy, safety, and tolerability
from the FINCH Phase 3 and DARWIN Phase 2 clinical study programs.
As part of the filgotinib development program we initiated FINCH 4 in RA. The FINCH 4 study is a
multi-center, open-label, long-term extension study to assess the safety and efficacy of filgotinib
in patients with RA, enrolling subjects who completed either FINCH 1, FINCH 2, or FINCH 3
studies.
We and Gilead published integrated safety data from 7 RA studies in Annals of the Rheumatic
Diseases (Winthrop et al 2021). Data were integrated from 3 Phase 3 studies (FINCH 1 – 3), 2
Phase 2 studies (DARWIN 1, 2), and 2 long-term extension studies (DARWIN 3, FINCH 4) including
up to 5.6 years of filgotinib exposure, and over a median of 1.6 years. In this pooled analysis,
filgotinib was well-tolerated, and no new safety concerns were identified. Adverse events of
MACE and DVT/PE were rare and occurred in similar numbers among all treatment groups, and
with similar incidence rate across dose groups. The data highlight the acceptable safety and
tolerability profile of filgitinib as monotherapy and in conjunction with MTX/csDMARDs2 in RA.
In animal toxicology studies in the preclinical phase, filgotinib at an exposure dose above the
approved dose in humans induced adverse effects on semen parameters. Consequently, Gilead
and Galapagos committed to conducting dedicated male patient semen analysis studies in RA,
AS, and PsA patients, called MANTA-RAy, and in UC and CD patients called MANTA, concurrent to
all Phase 3 programs.
In March 2021, we were pleased to report on the primary endpoint with the MANTA and MANTA-
RAy studies investigating the effect on semen parameters,
indicating that 8.3% of patients
on placebo and 6.7% of patients on 200mg filgotinib had a 50% or more decline in sperm
concentration at week 13.
2
csDMARD, conventional synthetic disease-modifying antirheumatic drugs
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Galapagos NV Annual Report 2021
RESEARCH & DEVELOPMENT
Jyseleca in UC
UC is an inflammatory bowel disease resulting in ulcerations and inflammation of the inner
layer of the colon and rectum. The current market for UC treatments is estimated at
~€1.0 billion in the five largest European markets.
Current treatment landscape in UC in EU
4%
Tofacitinib
16%
Vedolizumab
7%
Ustekinumab
73%
Anti-TNF
Source: UC Therapy Watch (Research Partnership) Q3 2021. Share of prescriptions of advanced therapies
Biologic therapies for UC were dominated by tumor necrosis factor (TNF) antagonists for nearly
20 years, but anti-integrin and anti-interleukin (IL)-12/IL-23 antibodies have recently become
available. Although the introduction of advanced therapies has improved the treatment of some
patients, 30% of patients do not respond to treatment,1 and 19% to 59% of initial responders
don’t have a sustainable treatment response.2,3 Therefore, the medical need for improved
treatment efficacy with additional treatment options remains high.
Commercialization and regulatory progress of Jyseleca in UC
Following approval of Jyseleca (200mg) for the treatment of adults with moderate to severe UC
in the European Union in 2021 and in January 2022 in Great Britain, Jyseleca is now launched in
UC in Germany and the Netherlands, with roll-out throughout the rest of Europe anticipated this
year.
1
2,
3
Allez M et al. Report of the ECCO pathogenesis workshop on anti-TNF therapy failures in inflammatory bowel diseases:
definitions, frequency and pharmacological aspects. J Crohns Colitis. 2010 Oct;4(4):355-66;
Ma C et al. Outpatient Ulcerative Colitis Primary Anti-TNF Responders Receiving Adalimumab or Infliximab Maintenance
Therapy Have Similar Rates of Secondary Loss of Response. J Clin Gastroenterol. 2015 Sep;49(8):675-82;
Ma C et al. Outpatient Ulcerative Colitis Primary Anti-TNF Responders Receiving Adalimumab or Infliximab Maintenance
Therapy Have Similar Rates of Secondary Loss of Response. J Clin Gastroenterol. 2015 Sep;49(8):675-82;
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RESEARCH & DEVELOPMENT
Jyseleca launches in UC in EU
2021
• Germany
• The Netherlands
2022
Countries in dark grey are planned for launch in 2022 and onwards, in part managed by Sobi
The European Summary of Product Characteristics for filgotinib, which includes contraindications
and special warnings and precautions, is available at www.ema.europa.eu. The individual Great
can be found
Britain and Northern Ireland Summary of Product Characteristics
at www.medicines.org.uk/emc and www.emcmedicines.com/en-GB/
northernireland respectively.
Gilead is responsible for Jyseleca outside Europe and submitted the new drug application in
Japan for filgotinib in UC to the Pharmaceuticals and Medical Devices Agency (PMDA) in the first
half of 2021. A decision on its potential approval is anticipated in the first half of 2022.
Safety and efficacy in the filgotinib UC development program
Filgotinib 200mg has shown favorable results in terms of rapid onset of action, efficacy, safety,
and tolerability from the SELECTION Phase 3 program in patients with moderate to severe UC.
The SELECTION Phase 3 data (Feagan et al. 2021) were published in The Lancet.
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Galapagos NV Annual Report 2021
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Both in biologic-naïve and in biologic-experienced patients a rapid onset of action for filgotinib
200mg at week 2, with a sustained effect up to 10 weeks, was observed in a pre-specified
exploratory analysis of the SELECTION study. The graph below shows the rapid onset in both
cohorts using the partial Mayo Clinic Score.
Rapid response with symptom relief from week 2
Induction (SELECTION)
biologic-naïve
biologic-IR
)
E
S
-
/
+
(
S
C
M
l
a
i
t
r
a
p
n
i
B
F
C
0.1
0.0
–0.5
–1.0
–1.5
–2.0
–2.5
–3.0
–3.5
–4.0
*
*
*
*
0.1
0.0
–0.5
–1.0
–1.5
–2.0
–2.5
–3.0
–3.5
–4.0
*
*
*
*
Baseline week 2 week 4 week 6
week 10
Baseline week 2 week 4 week 6
week 10
Placebo (N=137)
Filgotinib 200mg (N=245)
Placebo (N=142)
Filgotinib 200mg (N=262)
Results from a pre-specified exploratory analysis
* P < .05 filgotinib vs placebo (nominal p-values)
Biologic-IR: biologic-inadequate response, CFB: change from baseline, partial MCS: partial Mayo Clinic Score
Partial Mayo Clinic Score is based on all MCS subscores except for the endoscopy score
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Galapagos NV Annual Report 2021
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Additionally, data from a post hoc analysis of the maintenance study showed a greater proportion
of biologic-naïve and biologic-experienced patients receiving filgotinib 200mg maintained clinical
remission up to 58 weeks versus those receiving placebo (37% versus 11% p<0.001) and had
histologic remission (38% versus 13% p<0.001), 6-month corticosteroid-free clinical remission
(27% versus 6% p<0.01), as shown in the graph below, and published in TheLancet (Feagan etal.
2021).
Sustained remission at week 58
Maintenance (SELECTION)
Clinical remission
(primary endpoint)
∆26
****
37
Histologic
remission
∆25
****
38
60%
11
13
60%
)
%
(
s
t
n
e
i
t
a
p
f
o
n
o
i
t
r
o
p
o
r
P
6-Month CS-free
clinical remission
∆21
**
27
60%
6
(n=98)
(n=199)
(n=98)
(n=199)
(n=47)
(n=92)
Placebo
Filgotinib 200mg
** P < .01; **** P < .0001 filgotinib vs placebo
CS: corticosteroid
Clinical remission as measured by EBS (endoscopy subscore of 0 or 1, rectal bleeding subscore of 0, stool frequency
subscore of 0 or 1)
We presented a set of new data from the SELECTION study and SELECTION long-term extension
study in UC at the European Crohn’s and Colitis Organisation (ECCO) 2022 annual conference.
The key findings were:
1. Continued treatment with filgotinib for up to additional 96 weeks in the long-term extension
study was effective in maintaining long-term improvements in UC symptoms;
2.
3.
4.
Retreatment with filgotinib upon interruption, resulted in recovery of efficacy in most
patients and that filgotinib was well tolerated with no new safety concern;
Filgotinib's efficacy profile was consistent and the safety profile acceptable regardless of the
age group, analysing patients with up to 75 years of age;
Filgotinib was able to achieve the high bar of efficacy as defined by a combined endpoint of
clinical and quality of life (QoL) remission, endoscopic and biomarker improvement.
Furthermore, additional safety data from the SELECTION studies were presented at the 16th
European Crohn’s and Colitis Organisation (ECCO) 2021 virtual congress (Schreiber et al. 2021).
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Galapagos NV Annual Report 2021
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Data were analyzed from the SELECTION induction, maintenance, and long-term extension study
with a cumulative treatment exposure of 1,207 patient years for filgotinib 200mg versus 318
patient years for placebo, showing results consistent with the original induction and maintenance
studies, where filgotinib was well tolerated in patients with moderately to severely active UC.
Filgotinib in CD
FITZROY Phase 2 and global DIVERSITY Phase 3 program in CD
CD is an IBD of unknown cause, resulting in chronic inflammation of the gastrointestinal (GI)
tract with a relapsing and remitting course. The market today for CD treatments is estimated to
approximately €1.8 billion in the five largest European markets.
Today, with the most advanced therapies, only 30 – 40% of CD patients on treatment achieve
prolonged clinical remission. There are currently no highly effective oral therapies approved for
CD and, like RA, treatment is dominated by injectable, biological treatments including anti-TNF
therapies. Anti-TNF agents have improved the management of CD; however, not all patients
respond to these drugs, and secondary loss of response during the first year is reported in up
to 50% of patients annually in placebo-controlled trials. Therefore, a considerable unmet need
remains with existing treatments.
Dysregulation of the JAK signaling pathway has also been associated with CD, which suggests
that filgotinib, with its preferential selectivity for JAK1, may offer an attractive alternative for the
treatment of CD. It is hypothesized that with preferential inhibition of JAK1, unwanted side effects
such as anemia may be reduced. This is of particular importance to IBD patients, who frequently
experience fecal blood loss.
The FITZROY Phase 2 trial (NCT02048618) evaluated the efficacy and safety of 200mg once-daily
filgotinib in 174 patients with moderate to severe active CD and mucosal ulceration, who were
either anti-TNF naive or anti-TNF failures. As reported in The Lancet (Vermeire et al. 2016),
the FITZROY trial achieved the primary endpoint of clinical remission at week 10, and filgotinib
demonstrated a favorable tolerability profile consistent with the DARWIN trials in RA.
Gilead initiated the Phase 3 DIVERSITY trial (NCT02914561) with filgotinib in CD in November
2016. In October 2021, we announced the completion of patient enrollment with topline data
anticipated in the first half of 2023. The DIVERSITY Phase 3 trial investigates the efficacy and
safety of 100mg and 200mg filgotinib once-daily compared to placebo in patients with moderate
to severe active disease including those with prior antibody therapy failure. The DIVERSITY trial
enrolled 1,374 patients from the U.S., Europe, Latin America, Canada, and Asia/Pacific regions.
Men and women in the DIVERSITY trial will be randomized to receive placebo, 100mg, or 200mg
filgotinib. Due to preclinical findings with filgotinib regarding semen parameters,
in the U.S.
randomization to 200mg was restricted to male patients who failed at least one anti-TNF therapy
and vedolizumab.
Following the amended agreement with Gilead, Galapagos will now become the sole sponsor
of the DIVERSITY trial and the long-term extension study. The parties intend to complete the
transfer no later than 30 June 2022. Under the terms of the agreement and upon completion of
the transfer, Gilead will make a one-time payment of $15 million to Galapagos. From 1 April 2022,
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Galapagos NV Annual Report 2021
RESEARCH & DEVELOPMENT
Galapagos will also be solely responsible for all development costs for DIVERSITY. In addition, if
the EMA grants regulatory approval of filgotinib for the treatment of CD based on data from the
DIVERSITY trial, then royalties payable by Galapagos to Gilead will be reduced by 30% across all
filgotinib indications and will become 5.6 to 10.5% of net sales in Europe. These royalties are
payable as of 2024. Gilead remains responsible for commercial activities outside of Europe.
Phase 3 DIVERSITY in CD
Induction endpoints week 10
• Clinical remission (CDAI <150)
• Endoscopic response (SES-CD score, reduction ≥50% from BSL)
Maintenance endpoints week 58
Baseline
week 11
200mg
100mg
Placebo
200mg
100mg
Placebo
Biologic-
experienced
200mg
Placebo
100mg
Placebo
Placebo responders remain on placebo
Non-responders/worsening of disease: go to LTE
Filgotinib is not approved in CD by any regulatory authority
Adjacent to the filgotinib Phase 3 programs, we and Gilead are conducting dedicated studies
evaluating the potential impact of filgotinib on semen parameters in male CD and UC patients
(MANTA) and in male RA, PsA, and AS patients (MANTA-RAy).
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Galapagos NV Annual Report 2021
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In March 2017, Gilead initiated a Phase 2 study in small bowel CD (DIVERGENCE 1, NCT03046056)
and a Phase 2 study in fistulizing CD (DIVERGENCE 2, NCT03077412). Gilead stopped recruitment
in DIVERGENCE 1 early, completing the randomized, placebo controlled trial at week 10 for 46
patients, 75% of whom were biologic experienced. Filgotinib demonstrated a similar level of CDAI
remission in DIVERGENCE 1 as in the TNF experienced cohort of the FITZROY Phase 2 study in
CD (see graph below).
CDAI remission in DIVERGENCE 1
60
40
20
0
4/18
11/28
8/28
26/71
10/44
60/128
FITZROY overall
Placebo
200mg
Placebo
200mg
Notes: data on file, CDAI remission = CDAI <150, recruitment for the DIVERGENCE 1 study was stopped early
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Galapagos NV Annual Report 2021
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Our TYK2 program with GLPG3667
GLPG3667 is a reversible and selective TYK2 kinase domain inhibitor discovered by us.
In 2020, we tested the molecule in a healthy volunteer study. This Phase 1 study was a
randomized, double-blind, placebo-controlled dose escalation study evaluating safety,
tolerability, pharmacokinetics (PK) and pharmacodynamics (PD) of single and multiple ascending
oral doses of GLPG3667 for 13 days. Blood was drawn at multiple time points on Day 1 and
on Day 10 and stimulated ex vivo with several cytokines, including IFNα, to analyze the level of
inhibition in pSTAT signaling. The Phase 1 data showed an encouraging PK profile for once-daily
dosing and PD activity of GLPG3667:
INFa/pSTAT1
1
D
t
a
e
n
i
l
e
s
a
b
m
o
r
f
e
g
n
a
h
C
0
0.5
1
2
4
8
24
hours
0
0.5
1
2
4
8
24
hours
Day 1
Day 10
placebo
dose 1
dose 2
dose 3
Following these results, we initiated a randomized, placebo-controlled, double-blind Phase 1b
study in 31 patients with moderate to severe plaque psoriasis. Patients were randomized in a
1:1:1 ratio to a daily oral dose of GLPG3667 (low dose or high dose) or placebo, for a total of 4
weeks.
In July 2021, we announced positive topline results demonstrating that GLPG3667 was generally
well tolerated with a positive efficacy signal at week 4:
At week 4, four out of 10 patients in the high dose group had a PASI 50 response, defined
as at least a 50% improvement in PASI from baseline, compared to one out of 10 subjects
on placebo. There were no subjects with a PASI 50 response on the low dose of GLPG3667.
The 4 responders in the high dose group of GLPG3667 achieved a 52%, 65%, 74% and 81%
improvement respectively in their PASI scores from baseline, while the subject randomized
to placebo improved by 52%. Positive efficacy signals were also observed with the high dose
for other endpoints, including affected Body Surface Area and physician and patient global
assessment, versus placebo at week 4.
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Galapagos NV Annual Report 2021
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GLPG3667: clinical activity in Pso at week 4
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
s
s
e
l
r
o
B
F
C
%
g
n
i
v
e
h
c
a
s
t
c
e
b
u
s
i
j
f
o
%
–100%
–75%
PASI 75
–50%
PASI 50
–25%
0%
25%
PASI %CFB
GLPG3667 (high dose) (N=10)
GLPG3667 (low dose) (N=11)
Placebo (N=10)
Note: CFB: change from baseline; Pso: psoriasis
One subject in the low dose group interrupted participation in the study for one day for
exacerbation of psoriasis. The majority of treatment related adverse events (AEs) were mild
in nature and transient. There were no deaths or serious adverse events (SAEs) in this 4-week
study.
We are currently completing a dose escalation Phase 1 study to determine the optimal dose to
progress into a Phase 2 program, which is planned in 2022.
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Galapagos NV Annual Report 2021
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Our SIK program
The Salt-Inducible Kinases (SIKs) belong to a novel target class in inflammation which we
discovered with our proprietary target discovery platform. The search for this novel target class
started with the ambition to find new anti-inflammatory drug candidates with a favorable efficacy
and safety profile relative to existing therapies. Although significant progress has been made with
novel therapies in recent years, for instance in psoriasis, there remains a high unmet need for
diseases related to overactive inflammation in joints, the bowel, and other organs.
Molecules discovered by us and which inhibit the different members of the SIK family have shown
the potential to modulate anti-inflammatory cytokines and pro-inflammatory cytokines. Targeted
and selective inhibition of SIK proteins brings an opportunity to restore the immune balance that
is typically out of balance in autoimmune diseases. This approach brings potential differentiation
from existing therapies that predominantly act by suppressing the immune system (see figure
below).
Restoring the immune balance
Healthy
Immune balance
Disease
Autoimmune
Immunoregulatory
Pro-inflammatory
Immunoregulatory
Pro-inflammatory
SIK inhibition
Immune balance restored
Immunoregulatory
Pro-inflammatory
Current therapies
Immune supression
Immunoregulatory
Pro-inflammatory
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Galapagos NV Annual Report 2021
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SIK portfolio
The family of SIKs contains three targets: SIK1, SIK2 and SIK3. In our search for compounds
acting on these targets, over 5,000 molecules were synthesized leading to more than 11 different
chemical series with multiple selectivity profiles. Our first efforts in the space led to compound
GLPG3312, a pan-SIK inhibitor, that was tested in Phase 1 and soon thereafter replaced by a
more selective SIK2/3 compound, GLPG3970. We initiated a series of early-stage clinical trials
with GLPG3970 and reported the first topline results in July 2021. These initial results resulted
in proof-of-mechanism data, elucidating the role of SIKs in inflammation. GLPG4399, a selective
SIK3 inhibitor, is in Phase 1, whereas tissue selective SIK2/3 inhibitor GLPG4605 and other SIK
inhibitors are advancing preclinically (see figure below). Several other compounds with different
profiles are being explored in discovery.
Optimization through innovative chemistry
SIK1
multiple PCC
SIK2
GLPG3312
GLPG3970
GLPG4605
SIK3
GLPG4399
GLPG4399
multiple PCC
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Galapagos NV Annual Report 2021
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GLPG3970: encouraging Phase 1 data
Following positive results across a range of preclinical models, we evaluated GLPG3970 in a
Phase 1 single and multiple ascending dose study which demonstrated that GLPG3970 was
In addition, GLPG3970 had a dose-dependent effect on two key cytokines
well tolerated.
representative for its dual mode of action (see figure below). The pro-inflammatory cytokine,
TNFα, decreased with increased compound dosing (left). The anti-inflammatory cytokine, IL-10,
increased (right) with increasing compound dosing.
Dual mode of action confirmed ex vivo
Mean per treatment
TNF levels
IL-10 levels
1
D
t
a
e
n
i
l
e
s
a
b
m
o
r
f
e
g
n
a
h
C
0
0.5 1.0 2.0 4.0 8.0 24.0
0
0.5 1.0 2.0 4.0 8.0 24.0
hours
0
0.5 1.0 2.0 4.0 8.0 24.0
0
0.5 1.0 2.0 4.0 8.0 24.0
hours
Day 1
Day 14
Day 1
Day 14
placebo
dose 1
dose 2
dose 3
Pioneering role of SIKi in inflammation
We evaluated GLPG3970 in three randomized, placebo-controlled, double-blind studies:
i) a
Phase 1b study in patients with moderate to severe psoriasis and ii) two Phase 2a studies in
patients with moderate to severely active UC and RA. GLPG3970 or placebo were administered
orally once-daily for 6 weeks. The main objectives of the studies were to evaluate the safety and
tolerability of GLPG3970 as well as early signs of biological and clinical activity.
Across the three studies, GLPG3970 was generally safe and well tolerated. There were no deaths
nor serious adverse events, and the majority of treatment emergent adverse events (TEAEs) were
mild or moderate in nature.
CALOSOMA Phase 1b study in psoriasis
This randomized placebo-controlled study enrolled 26 patients with moderate to severe
psoriasis.
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Galapagos NV Annual Report 2021
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At week 6, four out of 13 patients on GLPG3970 had a PASI 50 response, defined as at least a 50%
improvement of baseline PASI, compared to none on placebo. Specifically, the four responders
achieved 50%, 50%, 56%, and 77% improvement in their PASI scores from baseline, reaching
statistical significance compared to placebo (p=0.002) at week 6. Positive signals of clinical activity
were also consistently observed for other endpoints, including affected Body Surface Area and
physician and patient global assessment, versus placebo at week 6.
GLPG3970: clinical activity in Pso at week 6
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
s
s
e
l
r
o
B
F
C
%
g
n
i
v
e
h
c
a
s
t
c
e
b
u
s
j
i
f
o
%
–100%
–75%
PASI 75
–50%
PASI 50
–25%
0%
25%
PASI %CFB
GLPG3970 (N=13)
Placebo (N=10)
Note: CFB: change from baseline
SEA TURTLE Phase 2a study in UC
This randomized placebo-controlled study enrolled 31 biologic-naïve patients with moderate to
severely active UC.
At week 6, positive signals on objective parameters such as endoscopy, histology, and fecal
calprotectin were observed in patients treated with GLPG3970. These findings did not translate in
a differentiation from placebo on change from baseline in the total Mayo Clinical Score (MCS), the
primary endpoint of this 6-week study (GLPG3970 -2.7, placebo -2.6). Seven out of 18 patients on
GLPG3970 who underwent endoscopy at week 6 met the criteria for Endoscopic Improvement,
defined as a score of 0 or 1 on the endoscopic response score, compared to one out of 9 patients
on placebo. The robustness of these signals will be further examined by assessing the correlation
to histological endpoints and tissue biomarker data.
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Signal on objective endpoints in UC with GLPG3970
100
80
60
40
20
0
39
11
)
m
u
t
c
e
r
(
e
r
o
c
s
l
y
g
o
o
t
s
i
H
40
30
20
10
0
Placebo (N=9)
GLPG3970 (N=18)
Placebo (N=1)
GLPG3970 (N=7)
BSL
W6
Endoscopic Improvement supported by histology results
Note: ER: Endoscopic Response, histology as measured by the Robart’s Histology Score (RHI), UC: ulcerative colitis
LADYBUG Phase 2a study in RA
This randomized placebo-controlled study enrolled 28 patients with moderate to severely active
RA and an inadequate response to methotrexate.
At week 6, patients on GLPG3970 showed no differentiation from placebo on change from
baseline in DAS28 (CRP) response (GLPG3970 -1.29, placebo -1.24), nor on most other efficacy
endpoints.
Outlook SIK portfolio
From these three clinical studies we learned that the SIK pathway has the potential to play
an important role in inflammation and confirms the therapeutic potential of SIK inhibitors in
inflammatory diseases. Although we will not progress GLPG3970 into clinical development, the
study results are an essential part of the broad evidence package that we are assembling on our
SIK program. This strengthens our understanding of the best approach going forward. Today, we
have several molecules targeting SIK2 and SIK3 with higher potency, as well as more selective
molecules acting on SIK2 and SIK3 combined, that we aim to advance. Generating data with
relative inhibition of SIK2 versus SIK3 will deepen our knowledge of the safety profile and inform
us which isoforms best match with specific inflammatory conditions. We are currently finalizing a
Phase 1 study with our SIK3 inhibitor GLPG4399 in healthy volunteers.
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Our fibrosis portfolio
Fibrotic disorders represent an area of significant unmet need and we currently focus our R&D
efforts on Idiopathic Pulmonary Fibrosis (IPF) and adjacent indications involving lung fibrosis.
About IPF
IPF is a major cause of morbidity and mortality globally. It is a chronic, relentlessly progressive
fibrotic disorder of the lungs that typically affects adults over the age of 40. In 2018, 232,000
patients were diagnosed with IPF in the U.S., EU4 & UK and Japan,1 and this population is
expected to grow, due to improved diagnosis, the aging population and worsening air pollution.
The clinical prognosis of patients with IPF is poor, with median survival at diagnosis only two
to four years. There are currently no treatment options available that can reverse or stop the
progression of disease and improve the quality of life of patients. Lung transplantation may be
an option for some patients with progressive disease and minimal comorbidities.
Esbriet
(pirfenidone, marketed by Roche/Genentech) and Ofev (nintedanib, marketed by
Boehringer Ingelheim) are approved in the U.S. and Europe for the treatment of mild to moderate
IPF, and have been shown to slow the rate of functional decline in IPF. These medicines are gaining
ground as the standard of care worldwide with combined sales of $3.5 billion in 2020.2
While these approvals represent a major breakthrough for IPF patients, these novel therapies
do not stop the decline in lung function and patients continue to experience disease worsening.
Additionally, the adverse effects associated with these therapies are considerable3 (e.g., diarrhea
and liver function test abnormalities with Ofev; nausea and rash with Esbriet). There remains thus
a high unmet medical need for patients with IPF.
GLPG4716
GLPG4716 is a novel, small molecule CHIT1/AMCase dual-inhibitor targeting a key pathway
implicated in inflammation and tissue remodeling. Increased chitinase activity has been observed
in several
in
November 2020 which we are planning to start a Phase 2 study in lung fibrosis.
inflammatory, fibrotic diseases. We in-licensed GLPG4716 from OncoArendi
1
2
3
Source: Decision Resources Group, Global Data, Galapagos Custom Research
Sales figures from Roche (pirfenidone; Esbriet®) and Boehringer Ingelheim (nintedanib; Ofev®)
Dempsey TM et al. Clinical effectiveness of antifibrotic medications for idiopathic pulmonary fibrosis. AmJRespirCritCare
Med 2019 Jul 15; 200:168.
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Other pipeline
Our CFTR program with GLPG2737 in ADPKD
Autosomal dominant polycystic kidney disease (ADPKD) affects approximately 12.5 million people
worldwide and is the fourth leading cause of kidney failure today.1 Typically with this disease, both
kidneys enlarge with fluid-filled cysts, leading to kidney failure for approximately half of patients
by the age of 60, and requiring dialysis and possibly kidney transplantation.2 Patients may also
suffer from hypertension, abdominal pain, kidney infections, cyst ruptures, bleeding, and other
symptoms impacting quality of life. Other organs may be affected as well. Treatment is aimed at
relieving symptoms and controlling the accompanying hypertension. Currently, only one therapy
(tolvaptan3) is available to slow down the progression of cyst development and renal insufficiency;
however, not all patients tolerate this therapy.4
GLPG2737 is a Cystic Fibrosis Transmembrane Conductance Regulator (CFTR) inhibitor which
was observed to be well tolerated by patients in previous clinical trials. It is hypothesized that
inhibition of the CFTR channel might reduce cyst growth and kidney enlargement for patients
with ADPKD.
We are currently investigating GLPG2737 in the MANGROVE Phase 2 randomized, double-blind,
placebo-controlled trial evaluating a once-daily oral dose of GLPG2737. GLPG2737 or placebo is
administered for 52 weeks, followed by an open-label extension period of 52 weeks, in 66 ADPKD
patients with rapidly progressing disease. The primary objectives of the trial are to assess the
effect on growth of total kidney volume over 52 weeks compared to placebo as well as overall
safety and tolerability. The secondary objectives include renal function, pharmacokinetics, and
pharmacodynamics.
MANGROVE study with GLPG2737
Screening
52 weeks
4 weeks
GLPG2737 oral (n=40)
Placebo (n=20)
Follow-up
Note: ADPKD: Autosomal dominant polycystic kidney disease; eGFR: Estimated Glomerular Filtration Rate (eGFR)
In November 2021 we announced completion of patient recruitment in the MANGROVE study,
with topline results anticipated in the first half of 2023.
1
Chebib F.T., Torres V.E. Autosomal Dominant Polycystic Kidney Disease: Core Curriculum 2016. AmJKidneyDis. May 2016,
67 (5) 792-810
Parfrey P.S., Bear J.C., Morgan J., Cramer B.C., McManamon P.J., Gault M.H., et al. The diagnosis and prognosis of autosomal
dominant polycystic kidney disease. N Engl J Med. 1990;323(16):1085–90
Jynarque®, Otsuka
Chebib F.T., Perrone R.D., Chapman A.B., Dahl N.K., Harris P.C., Mrug M., et al. A Practical Guide for Treatment of Rapidly
Progressive ADPKD with Tolvaptan. JASN. October 2018, 29 (10) 2458-2470
2
3
4
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Our JAK1 program with GLPG0555 in OA
GLPG0555 is a proprietary JAK1 inhibitor currently being evaluated in a randomized, double-
blind, placebo-controlled Phase 1b study with readout in 2022. The primary objectives of the
study include safety and tolerability of single intra-articular doses of GLPG0555 in healthy
volunteers. Secondary objectives include the pharmacokinetics and pharmacodynamics of
GLPG0555.
Our JAK1/TYK2 program with GLPG3121
We discovered GLPG3121 as a selective JAK1/TYK2 inhibitor with potential
in inflammatory
diseases. GLPG3121 is currently being evaluated in a randomized, double-blind, placebo-
controlled Phase 1 study to assess the safety, tolerability, and pharmacokinetics in healthy
volunteers with a decision to continue further development of the compound expected in 2022.
Our R&D portfolio
We continue to leverage our science and target discovery engine to further broaden our portfolio
of candidate medicines.
In our pipeline currently 10 programs are in lead optimization, 5
preclinical programs are developed towards testing in humans and 7 are in clinical stage
programs.
Deep R&D portfolio
7
clinical stage
programs
5
preclinical
candidate
programs
10
programs in LO
21
validated
targets
* LO: Lead optimization
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Our R&D collaborations
Our collaboration with Gilead
In July 2019, we and Gilead entered into a strategic R&D collaboration, giving Gilead access to our
innovative portfolio of compounds and our drug discovery platform, in return for a $3.95 billion
upfront payment and a $1.5 billion equity investment (including the exercise of warrant A). Gilead
is subject to a 10-year standstill, securing our long-term independence, and a lock-up until
22 August 2024. Following the amendment of the arrangement for the commercialization and
development of filgotinib late 2020, we have assumed sole commercial responsibility in Europe
and clinical development for the majority of ongoing trials with filgotinib. For the remainder of
the pipeline, we are eligible to receive a $150 million opt-in fee per program, plus tiered royalties
ranging from 20 – 24% on net sales of all our products outside of Europe (ex-filgotinib) opted-
in by Gilead. Galapagos retains European commercialization rights. Gilead remains responsible
for filgotinib outside Europe, including in Japan where filgotinib is approved and co-marketed
with Eisai. We received payments from Gilead in connection with changes in responsibility for the
commercialization and development of filgotinib in Europe, and Gilead will receive royalties from
European net sales on filgotinib.
Following the amended agreement with Gilead announced in October 2021, Galapagos will
become now the sole sponsor of the DIVERSITY trial of filgotinib in CD and the long-term
extension study. The parties intend to complete the transfer no later than 30 June 2022. Under
the terms of the agreement and upon completion of the transfer, Gilead will make a one-time
payment of $15 million to Galapagos. From 1 April 2022, Galapagos will also be solely responsible
for all development costs for DIVERSITY. In addition, if the EMA grants regulatory approval of
filgotinib for the treatment of CD based on data from the DIVERSITY trial, then royalties payable
by Galapagos to Gilead will be reduced by 30% across all filgotinib indications and will become
5.6 to 10.5% of net sales in Europe. These royalties are payable as of 2024. Gilead remains
responsible for commercial activities outside of Europe. See also Notes to the consolidated
financial statements.
Collaboration to further strengthen our commercial
launch
In October 2021, we signed an agreement with Sobi regarding the distribution of Jyseleca. Sobi
will distribute the medicine in Central and Eastern Europe, Greece, Portugal, and the Baltic
countries.
Inlicensing to further strengthen the inflammation
franchise
In April 2020, we announced a global collaboration with Ryvu focused on the discovery and
development of novel small molecule drugs in inflammation. In December 2021, we exercised
our exclusive option to license IP developed by Ryvu. Pursuant to this option exercise, Galapagos
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Galapagos NV Annual Report 2021
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is granted exclusive worldwide rights
commercialization of the program based on compounds discovered and developed by Ryvu.
to continue the research, development and
In August 2020, we announced a global collaboration with Scipher Medicine to advance novel
drug targets identified by Scipher for the treatment of IBD. We will jointly validate a suite of novel
IBD targets discovered by Scipher, after which we have the exclusive option to progress up to five
targets into drug discovery and development. Under the terms of the agreement, we will retain
the rights for the discovery, development, and commercialization of therapeutics for the selected
target(s).
Our fibrosis collaborations
In January 2019 we announced a global collaboration with Fibrocor focused on novel targets
in IPF. Fibrocor is responsible for all research activities until
lead optimization, and we are
responsible for the further development and commercialization of the in-licensed programs.
Galapagos took an undisclosed equity stake in Fibrocor (privately held).
In November 2020 we entered into an exclusive collaboration and license agreement with
OncoArendi Therapeutics for the global development and commercialization of GLPG4716, a
chitinase inhibitor, in IPF. Under the terms of the agreement, we are responsible for the further
development and commercialization of the program. In addition, we have the option to initiate
negotiations to obtain development or commercialization rights for selected preclinical candidate
molecules.
In October 2018, we and AbbVie amended and restated our collaboration agreement whereby
AbbVie took over all programs in CF. AbbVie obtained exclusive worldwide rights to the current
CF investigational drug candidate portfolio developed by the two companies in the course of the
collaboration, with the exception of GLPG1837 and GLPG2737. We retain rights to these two
compounds for use outside the field of CF. AbbVie will be responsible for all future activities
and will bear all costs associated with the CF portfolio. We will be eligible to receive additional
milestone payments pending completion of certain development, regulatory, and commercial
In the event AbbVie receives regulatory approval and realizes
milestones in CF by AbbVie.
commercial sales in CF, we are eligible to receive royalties ranging from single digit to low teens.
AbbVie further agrees to pay us, if approved, tiered single digit royalties on global commercial
sales from the candidate indications outside of CF.
Other early-stage collaborations
We have a collaboration agreement with e-therapeutics, as announced in June 2020, to identify
new therapeutic approaches to modulate a specific mechanism involved in IPF and potentially
in other fibrotic indications. e-therapeutics will be responsible for all computational activities
for the selected compounds. We will perform all experimental testing and are responsible for
development and commercialization. Under the terms of the agreement, e-therapeutics received
an upfront payment and is eligible to receive near-term payments plus pre-clinical, clinical,
regulatory, and commercial milestone payments.
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Galapagos NV Annual Report 2021
Risk
factors
Description of the risks of which
investors should be aware
Foundation & Future
RISK FACTORS
Risks related to commercialization
The marketing and sale of filgotinib or future approved products may be unsuccessful or less
successful than anticipated. We are heavily dependent on the success of filgotinib, which is
approved for the treatment of RA in the European Union, Great Britain and Japan, and for the
treatment of UC in the European Union and Great Britain, and under regulatory review for the
treatment of ulcerative colitis in Japan.
The commercial success of filgotinib and of any future products will depend upon the degree of
market acceptance by physicians, healthcare payers, patients, and the medical community.
We have limited sales and distribution experience and are currently building a marketing and
sales organization. We expect to continue to invest significant financial and management
resources to continue to build these capabilities and to establish a European commercial
infrastructure. To the extent any of our product candidates for which we maintain commercial
rights is approved for marketing, if we are unable to establish marketing and sales capabilities or
enter into agreements with third parties to market and sell our products, we may not be able to
market and sell any product effectively, or generate product revenues.
Coverage and reimbursement decisions by third-party payers may have an adverse effect on
pricing and market acceptance. Legislative and regulatory activity may exert downward pressure
on potential pricing and reimbursement for any of our product candidates, if approved, that
could materially affect the opportunity to commercialize.
Risks related to product development and
regulatory approval
We operate adequate standard operating procedures to secure the integrity and protection
of our research and development activities and results, and the optimum allocation of our
R&D budgets. The progress of the most important research and development programs is
continuously monitored by our management board; they are discussed with the supervisory
board at least once per quarter, and supervisory board members with expertise in clinical and
scientific matters occasionally attend meetings with our scientific staff to discuss and assess such
programs. Nevertheless, due to our limited resources and access to capital, we must and have
in the past decided to prioritize development of certain product candidates; these decisions may
prove to have been wrong and may adversely affect our business.
We are heavily dependent on the success of our candidate filgotinib. We are also dependent
on the success of our other product candidates, such as GLPG2737, GLPG3667, GLPG4716,
GLPG0555, GLPG3121, and GLPG4399. Filgotinib is approved for use in RA in the European
Union, Great Britain and Japan and for use in UC in the European Union and Great Britain,
and is currently under regulatory review for use in UC in Japan. In addition, we are heavily
investing in our early-stage product pipeline, including our SIK early-stage compounds, and these
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Galapagos NV Annual Report 2021
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drug candidates must undergo rigorous preclinical and clinical testing, the results of which are
uncertain and could substantially delay or prevent the drug candidates from reaching the market.
We cannot give any assurance that any product candidate will successfully complete clinical trials
or receive regulatory approval, which is necessary before it can be commercialized.
Our business and future success is substantially dependent on our ability to develop successfully,
obtain regulatory approval for, and then successfully commercialize our product candidate
filgotinib and our other product candidates. We are not permitted to market or promote any
of our product candidates before we receive regulatory approval from the FDA, the EMA, the
MHRA, the MHLW or any other comparable regulatory authority, and we may never receive such
regulatory approval for any of our product candidates. We cannot give any assurances that our
clinical trials for filgotinib or our other product candidates will be completed in a timely manner,
or at all. If filgotinib or any other product candidate is not approved and commercialized in certain
jurisdictions, we will not be able to generate any product revenues for that product candidate.
The regulatory approval processes of the FDA, the EMA, the MHRA, the MHLW and other
comparable regulatory authorities are lengthy, time consuming and inherently unpredictable,
and if we are ultimately unable to obtain regulatory approval for our product candidates, our
business will be substantially harmed.
Clinical testing is expensive and can take many years to complete, and its outcome is inherently
uncertain. Results of earlier studies and trials as well as data from any interim analysis of ongoing
clinical trials may not be predictive of future trial results, and failure can occur at any time during
the clinical trial process. If we experience delays in the completion of, or termination of, any
clinical trial of our product candidates, the commercial prospects of our product candidates will
be harmed, and our ability to generate product revenues from any of these product candidates
will be delayed. If filgotinib or any other product candidate is found to be unsafe or has lack of
efficacy, we will not be able to obtain or maintain regulatory approval for it and our business
would be materially harmed.
The rates at which we complete our scientific studies and clinical trials depend on many factors,
including, but not limited to, patient enrolment. Patient enrolment is a significant factor in the
timing of clinical trials and is affected by many factors including competing clinical trials, clinicians’
and patients’ perceptions as to the potential advantages of the drug being studied in relation to
other available therapies and the relatively limited number of patients. Any of these occurrences
may harm our clinical trials and by extension, our business, financial condition and prospects.
Our product candidates may cause undesirable side effects or have other properties that could
delay or prevent their regulatory approval, limit the commercial profile of an approved label, or
result in significant negative consequences following marketing approval, if any.
Undesirable side effects caused by our product candidates could cause us or regulatory
authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or
the delay or denial of regulatory approval by the FDA, the EMA, the MHRA, the MHLW or other
comparable regulatory authorities. The drug-related side effects could affect patient recruitment
or the ability of enrolled patients to complete the trial or result in potential product liability claims.
Any of these occurrences may harm our business, financial condition and prospects significantly.
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Galapagos NV Annual Report 2021
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Filgotinib, if approved or following approval, may have a labeling statement warning for male
patients. In animal toxicology studies in the preclinical phase, filgotinib at an exposure dose
above the approved dose in humans induced adverse effects on semen parameters. Adjacent to
the filgotinib Phase 3 programs, we and Gilead are conducting dedicated male semen analysis
studies in CD and UC patients (MANTA) and in RA, psoriatic arthritis, or PsA, and ankylosing
spondylitis, or AS, patients (MANTA-RAy).
Even now when filgotinib has received regulatory approval or marketing authorization in certain
jurisdictions, other regulatory authorities may impose dosing restrictions that differ from the
approved dosing regimen in other jurisdictions.
Box warnings, labeling restrictions, dose limitations and similar restrictions on use could have a
material adverse effect on our ability to commercialize filgotinib in those jurisdictions where such
restrictions apply.
EMA announced that its Pharmacovigilance Risk Assessment Committee (PRAC) started an article
20 specific pharmacovigilance procedure to investigate whether certain serious risks associated
with the JAK inhibitors Xeljanz (tofacitinib) and Olumiant (baricitinib) are associated with all JAK
inhibitors authorized in the EU for the treatment of inflammatory disorders, including filgotinib.
If the outcome of the EMA’s safety review results in amendments to the marketing authorization
for filgotinib, other additional requirements that the EMA may put in place with respect to
the development of JAK inhibitors generally, or other future actions by the EMA and other
comparable regulatory authorities, then such delays or (perceived) adverse developments or
results may harm our business, financial condition and prospects significantly.
If we lose orphan product exclusivity or are not able to obtain such status for future product
candidates for which we seek this status, or if our competitors are able to obtain orphan product
exclusivity before we do, we may not be able to obtain approval for our competing products for
a significant period of time.
Risks related to our financial position and
need for additional capital
We are an integrated biopharmaceutical company with a first commercial launch and have not
yet generated significant income. Our operations to date have been limited to developing our
technology and undertaking preclinical studies and clinical trials of our product candidates.
Since our inception, and with the exception of the year 2019, we have incurred significant
operating losses. We expect to continue incurring significant research, development and other
expenses related to our ongoing operations, and to continue incurring operating losses for the
foreseeable future. We cannot be sure to generate future revenues from the sales of filgotinib,
our first product approved for commercialization in the European Union, Great Britain and
Japan in the third quarter of 2020. Because of the numerous risks and uncertainties associated
with pharmaceutical product development, we are unable to predict the timing or amount of
expenses and when we will be able to achieve or maintain profitability, if ever.
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Galapagos NV Annual Report 2021
RISK FACTORS
We may require substantial additional future capital which may not be available to us on
acceptable terms, or at all, in order to complete clinical development and, if we are successful, to
commercialize any of our current product candidates. In addition, raising additional capital may
cause dilution to our existing shareholders, restrict our operations or require us to relinquish
rights to our product candidates or technologies. The incurrence of additional indebtedness
could result in increased fixed payment obligations and could also result in certain additional
restrictive covenants that could adversely impact our ability to conduct our business.
For further reference on financial risks in particular, see note 33 of the notes to the consolidated
financial statements.
Risks related to our reliance on third
parties
We are heavily dependent upon our collaboration arrangements with Gilead and certain other
third parties for the development and commercialization of our products and there can be no
assurance that these arrangements will deliver the benefits we expect.
In July 2019, we entered into a 10-year global research and development collaboration with Gilead.
In connection with our entry into the option, license and collaboration agreement, we received an
upfront payment of $3.95 billion and a €960 million ($1.1 billion) equity investment from Gilead.
Under the option, license and collaboration agreement, we will fund and lead all discovery and
development autonomously until the end of the relevant Phase 2 clinical study. After the completion
of the Phase 2 clinical study (or, in certain circumstances, the first Phase 3 study), Gilead will have the
option to acquire an exclusive commercial license to that program in all countries outside of Europe.
If the option is exercised, we and Gilead will co-develop the compound and share costs equally. In
addition, we are heavily dependent on Gilead for the commercialization of filgotinib and the further
development of our product candidate filgotinib outside of Europe. Gilead may not devote sufficient
resources or give sufficient priority to the programs in respect of which it acquires a commercial
license pursuant to the option, license and collaboration agreement. Furthermore, Gilead may not
be successful in the commercialization of filgotinib outside of Europe and further development and
commercialization of filgotinib or other programs for which it acquires a commercial license, even
when they do devote resources and prioritize their efforts for such programs.
the terms of
In addition,
the collaboration with Gilead and any collaboration or other
arrangement that we may establish may not ultimately prove to be favorable to us or may not be
perceived as favorable, which may negatively impact the trading price of the ADSs or our ordinary
shares. In addition, pursuant to the collaboration with Gilead, we are entitled to certain option
payments and tiered royalties, and milestone payments on certain products. There can be no
assurance that such payments will be sufficient to cover the cost of development of the relevant
product candidates.
We are subject to a number of additional risks associated with our dependence on our
collaborations with third parties, the occurrence of which could cause our collaboration
arrangements to fail. In particular, the collaboration we entered into in July 2019 is managed by
a set of joint committees comprised of equal numbers of representatives from each of us and
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Gilead. Conflicts may arise between us and Gilead, such as conflicts concerning the interpretation
of clinical data, the achievement of milestones, the interpretation of financial provisions or the
ownership of intellectual property developed during the collaboration, and there can be no
assurance that the joint committees will be able to resolve any such conflicts. If any such conflicts
arise, Gilead could act in a manner adverse to our best interests. Any such disagreement could
result in one or more of the following, each of which could delay or prevent the development or
commercialization of product candidates subject to the collaboration arrangements, and in turn
prevent us from generating sufficient revenues to achieve or maintain profitability:
reductions or delays in the payment of milestone payments, royalties or other payments we
believe are due;
actions taken by Gilead inside or outside our collaboration which could negatively impact
our rights or benefits under our collaboration including termination of the collaboration for
convenience; or
unwillingness on the part of Gilead to keep us informed regarding the progress of its
development and commercialization activities or regulatory approval or to permit public
disclosure of the results of those activities.
In addition to our collaboration with Gilead, we may also enter into future collaborations which
will give rise to similar risks, although our ability to enter into such collaborations may be limited
given the scale of our collaboration with Gilead.
If our global research and development collaboration with Gilead or other collaborations on
research and development candidates do not result in the successful development and
commercialization of products or if Gilead or another one of our collaboration partners
terminates its agreement with us, we may not receive any future research funding or milestone
or royalty payments under the collaboration. If we do not receive the funding we expect under
these agreements, our development of our product candidates could be delayed and we may
need additional resources to develop product candidates.
in establishing future development and commercialization
We may not be successful
collaborations, particularly given the scale of our collaborations with Gilead, and this could
adversely affect, and potentially prohibit, our ability to develop our product candidates.
trials, obtaining regulatory approval,
Developing pharmaceutical products, conducting clinical
establishing manufacturing capabilities and marketing approved products are expensive. Accordingly,
we have sought and may in the future seek to enter into collaborations with companies that have more
resources and experience. In the future, however, our ability to do so may be limited given the scale
of the 10-year global research and development collaboration that we entered into with Gilead in July
2019. If Gilead declines to exercise its option and we are otherwise unable to obtain a collaboration
partner for our product candidates, we may be unable to advance the development of our product
candidates through late-stage clinical development and seek approval in any market. In situations where
we enter into a development and commercial collaboration arrangement for a product candidate,
we may also seek to establish additional collaborations for development and commercialization in
territories outside of those addressed by the first collaboration arrangement for such product
candidate. If any of our product candidates receives marketing approval, we may enter into sales
and marketing arrangements with third parties with respect to otherwise unlicensed or unaddressed
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RISK FACTORS
territories. Furthermore, there are a limited number of potential collaboration partners, and we expect
to face competition in seeking appropriate collaboration partners. If we are unable to enter into any
development and commercial collaborations and/or sales and marketing arrangements on acceptable
terms, or at all, we may be unable to successfully develop and seek regulatory approval for our product
candidates and/or effectively market and sell approved products, if any.
We rely on third party suppliers for which a reliable supply of materials is required in order to
avoid delays in the drug discovery and development process and commercial supplies of any
approved product. Most goods and services are provided by several different suppliers, which
mitigates the risk of loss of key suppliers.
Expanding the suppliers’ network can be time consuming as all source suppliers are subject
to rigorous ethical and quality control standards. Our suppliers are required to adhere to
contractual terms that include anti-bribery and anti-corruption provisions. Our general terms and
conditions of purchase also contain a specific clause on anti-bribery and anti-corruption. They
can be found on our website.
We have relied on and plan to continue to rely on contract research organizations, or CROs, to
monitor and manage data for our preclinical and clinical programs. We and our CROs also rely
on clinical sites and investigators for the performance of our clinical trials in accordance with the
If CROs do not
applicable protocols and applicable legal, regulatory and scientific standards.
successfully carry out their contractual duties or obligations or meet quality standards, regulatory
requirements or expectations, our clinical trials may be extended, delayed or terminated and we may
not be able to obtain regulatory approval for or successfully commercialize our product candidates.
We do retain responsibility for all our studies and are required to and have put in place measures to
manage, oversee, and control our studies, including the CRO selection process, audits, strong focus
on deliverables, timelines, roles & responsibilities, and oversight of conduct of the studies.
We rely on clinical data and results obtained by third parties that could ultimately prove to
be inaccurate or unreliable. If the third-party data and the results that we rely on prove to be
inaccurate, unreliable or not applicable to our product candidates, we could make inaccurate
assumptions and conclusions about our product candidates and our research and development
efforts could be materially adversely affected.
Risks related to our competitive position
We face significant competition for our drug discovery and development efforts, and if we do not
compete effectively, our commercial opportunities will be reduced or eliminated.
The biotechnology and pharmaceutical industries are intensely competitive and subject to rapid
and significant technological change. Our competitors may develop drug products that render
our products obsolete or non-competitive by developing more effective drugs or by developing
their products more efficiently. In addition, our ability to develop competitive products would be
limited if our competitors succeeded in obtaining regulatory approvals for drug candidates more
rapidly than we were able to or in obtaining patent protection or other intellectual property rights
that limited our drug development efforts.
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Risks related to our intellectual property
Our ability to compete may decline if we do not adequately protect our proprietary rights.
We endeavor to protect our proprietary technologies and know-how by entering into
confidentiality and proprietary information agreements with our employees and partners, and by
setting up special procedures (e.g. with respect to the handling of the laboratory books).
Our commercial success depends on obtaining and maintaining proprietary rights to our product
candidates, as well as successfully defending these rights against third party challenges. We
will only be able to protect our product candidates, and their uses from unauthorized use by
third parties to the extent that valid and enforceable patents, or effectively protected trade
secrets, cover them. If we fail to maintain to protect or to enforce our intellectual property rights
successfully, our competitive position could suffer, which could harm our results of operations.
Pharmaceutical patents and patent applications involve highly complex legal and factual
questions, which, if determined adversely to us, could negatively impact our patent position. Our
success will depend in part on our ability to operate without infringing the intellectual property
and proprietary rights of third parties. We cannot guarantee that our business, products and
methods do not or will not infringe the patents or other intellectual property rights of third
parties. There is significant litigation activity in the pharmaceutical
industry regarding patent
and other intellectual property rights. Such litigation could result in substantial costs and be a
distraction to management and other employees.
The patent positions of biotechnology and pharmaceutical companies can be highly uncertain
and involve complex legal and factual questions. The interpretation and breadth of claims
allowed in some patents covering pharmaceutical compositions may be uncertain and difficult
to determine, and are often affected materially by the facts and circumstances that pertain to
the patented compositions and the related patent claims. The standards of the United States
Patent and Trademark Office, the European Patent Office, and other foreign counterparts are
sometimes uncertain and could change in the future. If we fail to obtain and maintain patent
protection and trade secret protection of our product candidates, we could lose our competitive
advantage and the competition we face would increase, reducing any potential revenues and
adversely affecting our ability to attain or maintain profitability.
We will not seek to protect our intellectual property rights in all jurisdictions throughout the
world and we may not be able to adequately enforce our intellectual property rights even in the
jurisdictions where we seek protection.
Filing, prosecuting and defending patents on our product candidates in all countries and
jurisdictions throughout the world would be prohibitively expensive, and our intellectual property
rights in some countries could be less extensive than those in the United States and Europe.
Consequently, we may not be able to prevent third parties from practicing our inventions in all
countries, or from selling or importing products made using our inventions.
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Risks related to our organization,
structure and operation
Our future success depends on our ability to retain the members of our management board
and to attract, retain and motivate qualified personnel. If we are not successful in attracting and
retaining highly qualified personnel, we may not be able to successfully implement our business
strategy. Attractive development and training programs, adequate remuneration and incentive
schemes and a safe and healthy work environment mitigate this risk.
We expect that if we continue to build our development, medical and commercial organizations,
we will require significant additional investment in personnel, management and resources. Our
ability to achieve our research, development and commercialization objectives depends on our
ability to respond effectively to these demands and expand our internal organization, systems,
controls and facilities to accommodate additional anticipated growth. If we are unable to manage
our growth effectively, our business could be harmed and our ability to execute our business
strategy could suffer.
We are currently further building our marketing and sales organization. To the extent any of our
product candidates for which we maintain commercial rights is approved for marketing, if we are
unable to establish marketing and sales capabilities or enter into agreements with third parties
to market and sell our product candidates, we may not be able to effectively market and sell any
product candidates, or generate product revenues.
Our information technology systems could face serious disruptions that could adversely affect
our business. Continuing an uninterrupted performance of our IT system is critical to the success
of our business strategy and operations. A recovery plan for data has been implemented, as well
as a system for interception of power failures. Fire walls and virus scanners provide an additional
and adequate protection. Our personnel should adhere to continuity plans and procedures
regarding access rights and installation of different programs. Business interruptions could delay
us in the process of developing our product candidates. This risk has a high potential impact, but
is mitigated by policies and procedures such as surveillance of the buildings, annual appraisals
and bonuses, and monthly management meetings.
including the European General Data
We have to comply with applicable data privacy laws,
Protection Regulation, or GDPR, which imposes strict obligations and restrictions on the
collection and use of personal data. In the ordinary course of our business, we collect and store
sensitive data. Many third party vendors that support our business processes also have access
to and process sensitive information. Although we have taken preventative measures and set
up procedures regarding data processing, data breaches, loss of data and unauthorized access
could still occur. These could result in legal claims or proceedings, liability under laws that protect
the privacy of personal information, including the GDPR, and significant regulatory penalties,
disrupt our operations and damage our reputation.
Despite our efforts to monitor social media and comply with applicable rules, there is a risk that
the use of social media by us or our employees to communicate about our drug candidates
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or business may cause us to be found in violation of applicable requirements. In addition, our
employees may knowingly or inadvertently make use of social media in ways that may not
comply with our social media policy or other legal or contractual requirements, which may
give rise to liability, lead to the loss of trade secrets, or result in public exposure of sensitive
information. Furthermore, negative posts or comments in social media could seriously damage
our reputation, brand image, and goodwill.
We may undertake strategic acquisitions in the future and any difficulties from integrating such
acquisitions could adversely affect our share price, operating results and results of operations.
We may acquire companies, businesses and products that complement or augment our existing
business. We may not be able to integrate any acquired business successfully or operate any
acquired business profitably. Integrating any newly acquired business could be expensive and
time-consuming. Integration efforts often take a significant amount of time, place a significant
strain on managerial, operational and financial resources, result in loss of key personnel and
could prove to be more difficult or expensive than we predict. As part of our efforts to acquire
companies, business or product candidates or to enter into other significant transactions, we
conduct business, legal and financial due diligence with the goal of identifying and evaluating
material risks involved in the transaction. Despite our efforts, we ultimately may be unsuccessful
in ascertaining or evaluating all such risks and, as a result, might not realize the intended
advantages of the transaction.
If we are unable to use tax loss carryforwards to reduce future taxable income or benefit from
favorable tax legislation, our business, results of operations and financial condition may be
adversely affected. We may incur unexpected tax charges, including penalties, due to the failure
of tax planning or due to the challenge by tax authorities on the basis of transfer pricing. Any
changes to Belgian and international taxation legislation or the interpretation of such legislation
by tax authorities may influence our activities, financial situation and results. Such potential
changes and their impact are monitored carefully by management and its advisors.
Being active in research and development in Belgium, France and the Netherlands, we have
benefited from certain research and development incentives. If the Belgian and/or the French
and/or the Dutch government decide to eliminate, or reduce the scope or the rate of, the
research and development incentive benefit, either of which it could decide to do at any time, our
results of operations could be adversely affected.
As a company active in research and development in Belgium, we also expect to benefit from
the “innovation income deduction” in Belgium. The innovation income deduction regime allows
net profits attributable to revenue from among others patented products (or products for which
the patent application is pending) to be taxed at a lower effective rate than other revenues. The
effective tax rate can thus be reduced up to 3.75%. At 31 December 2021 we had €301.3 million
of carryforward innovation income deduction in Belgium.
Our inability to qualify for the abovementioned advantageous tax regimes, as well as the
introduction of the minimum taxable base and any other future adverse changes of Belgian tax
legislation, may adversely affect our business, results of operations and financial condition.
We have received several technological innovation grants to date, to support various research
programs from an agency of the Flemish government to support technological innovation in
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Flanders. In 2021 we have also received a grant from the National Institute for Health and
Disability Insurance. If we fail to comply with our contractual obligations under the applicable
technological innovation grant agreements, we could be forced to repay all or part of the grants
received.
We annually establish a detailed budget that is submitted to the supervisory board for review
and approval. Our performance compared to the budget is continuously monitored by our
management board and is discussed with the supervisory board at least once per quarter.
For the establishment of our financial information, we have processes and methods in place
that enable the preparation of consolidated financial statements for our annual and quarterly
reporting. Our management reporting systems – which include an advanced integrated ERP
system – secure the generation of consistent financial and operational
information, allowing
management to follow-up our performance on a daily basis.
Our business may be adversely affected as a result of computer system failures. We may
suffer data leaks, security incidents or become the target of cyber-attacks, as a result of which
information and/or intellectual property may be materially
our financial assets, confidential
negatively impacted. We may not be able to successfully protect our computer systems against
unauthorized access by third parties.
The occurrence of unforeseen or catastrophic events, including extreme weather events and
other natural disasters, man-made disasters, or the emergence of epidemics, depending on their
scale, may cause different degrees of damage to the national and local economies and could
cause a disruption in our operations and have a material adverse effect on our financial condition
and results of operations. Man-made disasters, pandemics, and other events connected with the
regions in which we operate could have similar effects. For example, the impact of COVID-19 on
our business is uncertain at this time and will depend on future developments, but prolonged
closures may disrupt our operations and the operations of our agents, contractors, consultants
or collaborators, which could negatively impact our business, results of operations and financial
condition. Further, uncertainty around these and related issues could lead to adverse effects on
the economy of the United States and other economies, which could impact our ability to develop
and commercialize our products and raise capital going forward.
The armed conflict between Russia and Ukraine could cause a disruption in our operations. We
currently have ongoing clinical studies for filgotinib with CROs located in Ukraine and Russia. If
our CROs experience disruptions to their business due to the military conflict in Ukraine and the
sanctions against Russia, it could result in delays in our clinical development activities, including
delay of our clinical development plans and timelines, or could cause interruptions in operations
of regulatory authorities. The impact on ongoing pivotal studies such as DIVERSITY 1 will remain
limited. We continue to monitor the situation and are taking measures to mitigate the impact
on our ability to conduct clinical development activities. Interruptions or delays in our and our
CROs’ ability to meet expected clinical development deadlines or to comply with contractual
commitments with respect to the same, could lead to delays in our overall developmental
and commercialization timelines, which would adversely impact our ability to conduct clinical
development activities and complete them on a timely basis. Since 24 February 2022, we have
extended the focus of the business continuity plan to closely monitor each program in context
of the currently ongoing Ukraine-Russia crisis and the associated specific regulatory, institutional,
and government guidance and policies.
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Market risks relating to the Galapagos
shares
We have identified the following major market risks:
Possible volatility of share price
The market price of the shares might be affected by a variety of factors outside management
control, such as the global economic situation, the business development of competitors,
sector mergers and acquisitions; it is difficult to mitigate this risk.
Economic risk due to failure in confidence
General public confidence about future economic conditions or performance of us or our
suppliers or customers may impact the ability or willingness of others to trade with us.
Dilution through capital increases
Raising additional capital may cause dilution to our existing shareholders. By raising
additional capital through capital increases with cancellation of the preferential subscription
rights of our existing shareholders, these shareholders will be diluted.
Dilution through exercise of subscription right plans
The exercise of existing subscription rights can significantly increase the number of
outstanding Galapagos shares.
Inability to distribute dividends
We have a limited operating history and future profitability cannot be guaranteed. Galapagos
NV has significant losses carried-forward and will thus not be able to distribute dividends in
the near future. This can cause people to refrain from investing in Galapagos shares.
Reputational damage
High ethical standards are maintained throughout the entire organization at all levels. Laws
and guidelines are complied with. Our suppliers are required to adhere to contractual
terms which include anti-bribery and anti-corruption provisions. In addition, our external
consultants are required to comply with our Code of Business Conduct and Ethics and U.S.
Foreign Corrupt Practices Act Policy.
Belgian law provisions
There are several provisions of Belgian company law and certain other provisions of Belgian
law, such as the obligation to disclose important shareholdings and merger control, that may
apply to us and which may make an unfriendly tender offer, merger, change in management
or other change in control, more difficult. These provisions could discourage potential
takeover attempts that third parties may consider and thus deprive the shareholders of the
opportunity to sell their shares at a premium (which is typically offered in the framework of a
takeover bid).
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General statement about Galapagos’ risks
According to our current assessment we consider the risks to be manageable and our going
concern not to be endangered at the time of the current report. Assuming no further
deterioration of the global business, financial and regulatory environment, we consider ourselves
well prepared to meet all future challenges.
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CSR
report
Improving lives
Foundation & Future
CSR REPORT
Our commitment
Since the foundation of Galapagos in 1999, we have worked hard and continuously on bringing
novel medicines to patients. I am proud of, and grateful for, the dedication of our employees as
they have worked towards these goals, striving for innovation and knowledge while conducting
business in an ethical and responsible manner. Our core values and culture are engrained in our
DNA, as we build on these foundations for the future.
Our commitment to Corporate Social Responsibility (CSR) is intrinsically linked to our core
mission: to discover and develop novel mechanism of action medicines for diseases with high
unmet medical needs, to make a lasting positive contribution to society and improve the lives of
patients worldwide.
Based on our core mission, in 2018, we engaged with internal and external stakeholders across
our different locations to define the four material aspects of our corporate responsibility and
sustainability approach. These help us to identify and prioritize the issues that matter most to
our business in terms of growth, risk, and goals, and to our stakeholders, including patients,
investors, partners, and suppliers. The four material aspects have remained the
employees,
pillars of our CSR strategy and action plans in 2021 and ensure that we report on the subjects
that matter most.
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Today, we are excited to announce that in 2022, we will embark upon a company-wide CSR
strategy to further strengthen the foundations for our sustainable future as an independent,
fully integrated European biotech. Supported by the members of our management board, we
have established a CSR Steering Committee, comprised of representatives from key departments
throughout the organization. We plan to review our materiality assessment with internal and
external stakeholders, to assess whether our current pillars best describe our contributions
to, and impact on, society. Based on this, we aim to define a long-term ambition, measurable
objectives, and a roadmap to improve performance and boost engagement. To increase our
reporting on sector-relevant objectives, aid transparency and improve access to goals and
performance, we intent to add further reporting frameworks in future CSR reports.
Respectfully,
Onno van de Stolpe, CEO
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Galapagos’ four priority topics and material CSR
aspects:
Driving innovation
Accelerating science and innovation through collaboration
Providing access to our knowledge
Go to chapter
Our employees are the strength behind Galapagos
Building a strong corporate culture, driven by an engaged
workforce
Human capital management
Go to chapter
Conducting business ethically and responsibly
Manage our operations with ethics and integrity
Our Code of Conduct
Go to chapter
We care about the environment, health, and safety
Eco-efficient operations
Employee well-being
Go to chapter
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To standardize our data collection, we use the United Nations Sustainable Development Goals
(SDGs), also known as the Global Goals, as our reference framework to link these material aspects
to areas of engagement. The SDGs were adopted by all United Nations Member States in 2015
as a universal call to action to end poverty, protect the planet, and ensure that all people enjoy
peace and prosperity by 2030.
This CSR report provides the non-financial information required by articles 3:6 § 4 and 3:32 § 2
of the Belgian Companies Code. For a discussion on risks, please see the section on Risk factors
in this Annual Report.
We have identified two core SDG goals where we believe we can make a difference, as well as six
enabling SDG goals which help us to materialize our commitment in alignment with our four CSR
pillars.
The table below links our material aspects and engagement areas to selected aspects of the SDG
framework:
CORE SDG
Good health and well-being
Health and improving lives through our breakthrough
medicines are at the core of what we do
Partnerships for the goals
We embrace internal and external partnerships to work
towards our mission to bringing much needed
innovation to patients
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ENABLING SDG
Quality education
We invest in our employees and foster an inclusive, open
and supportive work environment across our 12
locations in Europe and the U.S.
Gender equality
We cultivate a corporate culture where we strive for
gender equality
Decent work and economic growth
We have achieved our long-term ambition of becoming
a fully integrated biopharmaceutical company and
currently employ >1,300 people across our 12 locations
in Europe and the U.S.
Industry, innovation and
infrastructure
Our mission is to bring innovative medicines to patients
suffering from severe diseases in areas of high unmet
medical need in a social and sustainable way
Reduced inequalities
We aim to develop a balanced workforce across a
number of
gender, nationality,
including
ethnicity, experience and disability
criteria,
Climate action
We value our planet and take initiatives to safeguard the
environment and incorporate greener practices across
our organization
Our commitment and areas of engagement are described below in the discussion of the four
materials aspects, which are also linked to the eight SDGs that we consider important to the
company.
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Material aspect 1: Driving innovation
We strive to discover, develop, and commercialize breakthrough medicines with novel
mechanism of action, addressing diseases where a high unmet medical need remains. Our
mission is to add years of life and to improve the quality of life of patients suffering from severe
diseases, with innovative medicines that offer alternative treatment options.
We are pioneering for patients
There is a real need for innovative medicines that address the underlying cause of a disease.
There are many diseases for which there is no approved therapy today, and many more diseases
for which current therapies leave room for improvement in patient outcomes. New mechanism
of action medicines offer patients and caregivers alternative clinical options. At the same time,
they have the potential to decrease the burden for society, by lowering healthcare costs.
We create value through science and
innovation
Based on our powerful drug discovery engine, we are building a differentiated pipeline of novel
product candidates to ensure continued innovation, with potential benefits to patients, healthcare
professionals and society. To deliver on our mission to improve people’s lives, we build partnerships
to accelerate science and innovation, while sharing knowledge with a wider community.
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Accelerating science and innovation through
collaboration
Innovation is the key for us to deliver on our mission to improve people’s lives. We strive to spark,
establish, and endorse innovation at every level of our company. To realize that ambition, we
foster team work and actively collaborate with different partners, each with their own specific
experience, knowledge, and field of excellence.
Collaboration with academic institutions
We establish relationships and work closely with academic organizations and universities to
accelerate development and boost innovation in discovery, preclinical, and clinical development.
Our team in discovery partners with a number of renowned institutions and consortia, including:
Institut de Ricerca Biomedica (IRB) in Barcelona, to identify and validate up to 20 drug targets
in inflammation and fibrosis;
S. Fillatreau, Institut Necker Enfants Malades in Paris, in order to gain a deeper understanding
of the involvement of B-cell subtypes in human pathologies;
M. Mendoza, Genopole in Evry, to develop and use spatial transcriptomics approaches;
SMART Organ-on-Chip, a consortium of academic and industry partners, coordinated by
Prof.dr.ir.
Jaap den Toonder, Eindhoven University of Technology (TU/e), to develop a
standardized open modular approach to recapitulate tissue and disease biology, funded by
NWO.
To gain more insights in specific disease areas, we collaborate with a number of experts,
including:
For IBD:
Prof. Dr. Séverine Vermeire, University Hospital Leuven (Belgium) for IBD back-translation
approaches using patient samples (blood, colon biopsies);
Dr.ir. Paul Vos, INIMINI-health, Wageningen University (The Netherlands) to study health-
promoting nutrition and drugs using immune- and microbiota-competent intestine-on-a-
chip. This research aims to integrate microbiota and immunity into a miniaturized assays
and is funded by Health Holland.
For IPF:
Prof. Wim Wuyts, University of Leuven (Belgium) to discover targets and biomarkers in IPF
using IPF lung transplant samples.
For ADPKD:
VLAIO collaboration with Prof. Djalila Mekhali, University Hospital Leuven (Belgium) to
better understand cystogenesis in ADPKD;
Prof. Steven Ballet, Drug Innovation and Modulation research group at the Free
University of Brussels (Belgium) for oligonucleotides peptide conjugation for kidney
targeting.
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For OA:
Prof. Ingrid Meulenbelt, FOACUS, Leiden University Medical Center (The Netherlands)
for the development of a high throughput human osteoarthritis screening platform for
disease target identification, funded by Health Holland;
Prof. Gerjo van Osch, HypOA, Erasmus Medical Center (The Netherlands) to understand
the early processes in osteoarthritis through single cell RNA sequencing and
development of in vitro assays that recapitulate relevant disease processes, funded by
Health Holland.
Our research throughout these different disease areas is reflected in our differentiated pipeline
as shown below:
Differentiated portfolio
Note: filgotinib is approved for RA in EU and Japan, approved for UC in EU and filed for UC in Japan
Beyond these specific disease areas, we partner with Exeter University (UK) to contribute to
sociological research around clinical trials in rare diseases, to optimize patient engagement and
expand access to clinical trials. The project will also cover ethnographic research on planning and
implementation of patient engagement activities at Galapagos. The collaboration started in 2021 and
will span a period of three years.
Furthermore, we welcome students through internships and study projects, while we support
our employees to collaborate with universities to obtain a doctoral research degree (PhD).
Collaborations with patient organizations and healthcare
providers
Since our foundation, patients are our North star. We aim to a real difference to patients,
their caregivers and families. To further build on that ambition and to grow closer to all our
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OAIBDADPKDJAK1JAK1/TYK2TYK2SIK3SIKiChitinaseIPFUndisclosedSIK2/3CFTRfilgotinib‘0555‘3121‘3667‘4399PCC‘4716‘4586‘4605‘2737Phase 2Phase 1ClassAssetPhase 3FilingApprovalCDUCRA & UCInflammationFibrosisKidney disease CSR REPORT
stakeholders, in 2021, we started working with three independent patient advisors and seven
representatives from key umbrella and therapeutic area-specific patient organizations to develop
the Galapagos Patient Partnership Charter (PPC).
In true Galapagos spirit, the Charter is about leading by example. We decided, from the start, to
co-develop it with the patient community.
Launched in early 2022, the Charter defines what we stand for, what partnering with patients
means to us, and our approach and commitments to working with and for patients.
To ensure continuity, we want to build on the great collaboration with patient representatives
and advocates that we are currently engaging with. We are in the process of setting up the
Galapagos Patient Engagement Council, a consultative body that will advise Galapagos on patient
engagement-related topics and act as a knowledge exchange platform between Galapagos and
the patient community.
to healthcare professionals
Alongside our commitment to patients, their caregivers and families, we strive to offer optimal
support
launched
GalapagosHealth.com, a hybrid engagement environment where HCPs have access to the latest
thinking and evidence on the treatment and management of RA and UC, based on clinical and real-
world data, as well as through medical education that raises the industry standard to the next level.
in 2021, we
To that
(HCPs).
aim,
€492M
Research &
Development
Expenses in 2021
Industry collaborations
We have several collaborations in place with other companies to complement and enhance our
R&D efforts.
We entered into a strategic R&D collaboration with Gilead in 2019. We strongly believe that this is
a mutually beneficial long-term collaboration, as we gain access to Gilead’s extensive experience
in drug development and commercialization, and Gilead to our platform and pipeline, with option
rights to our current and future programs outside Europe.
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Additionally, we have:
Collaborations with Ryvu and Scipher Medicine to further expand our inflammation pipeline
and discover and develop novel targets in inflammation;
Collaborations with Fibrocor and OncoArendi to jointly work on innovative approaches to
treat severe fibrotic diseases.
In addition to these ongoing collaborations, we continue to diligently evaluate new business
development opportunities in our pursuit to bring innovation to patients.
Providing access to our knowledge
Promoting an open innovation model, while reaching out to a
wider community
At Galapagos, we are committed to communicate the results from patient studies in a
transparent way. Even if a clinical study has been terminated earlier than anticipated, we report
the findings, based on the endpoints defined in these trials and share these with the medical
community.
Open access publishing best serves our aim to make our observations in clinical development
available barrier free to the research and medical community as well as to other stakeholders.
Open access ensures that the highest quality, peer-reviewed evidence is available to anyone,
anywhere in the world. It improves transparency, advances medical science and, we believe,
ultimately improves people’s lives.
We are proud that amongst our peers, we are one of the very first to publish with open access
and as of October 2020 we, by our policy, make our publications freely accessible in peer-
reviewed scientific and medical journals.
Furthermore, as of 2020 we actively participate in Open Pharma initiative, a first-ever
collaborative, multi-sponsor, non-profit project. We believe that publications are the route to
credible, compliant pharma communications. Open Pharma’s long-term goal is to secure the
same terms for authors who publish company-funded research as those for authors who publish
research funded through other means. As such, all research findings are freely available to read
and reuse, from the date of publication.
In 2021, Open Pharma published recommendations for plain language summaries of peer
reviewed medical publications. We all believe that, as a minimum standard, publications should
include a plain language summary in the style of an abstract that is easily accessible and
straightforward to understand, free of expert jargon, unbiased, and non-promotional.
We promote careers in science through science, technology,
engineering, math (STEM) initiatives
We actively engage in promoting science education and careers in science. We joined a
consortium of more than 18 global companies and local organizations with one joint objective:
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creating a spark for science, technology, engineering, and math, specifically targeting youngster
between the age of 10 and 14. Together with young people, we are engaging parents, teachers,
and businesses to achieve this goal, and are targeting schools, businesses, events, and online
channels, using an inclusive and gender-sensitive approach.
Our goals are to inspire children and youngsters, and to enhance access to STEM related
subjects. We aim to:
Demonstrate that major societal challenges such as biodiversity, climate change, vaccines,
and digitization can be tackled with STEM knowledge;
Collaborate with parents, teachers, and businesses to get STEM online and offline, in order
to bring it closer to the target audience;
Illustrate that STEM is for everyone, regardless of background, gender, and ethnicity, by giving
due attention to specific target groups.
More information is available on www.dasgeniaal.be and www.cestgenial.be.
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Image from our latest science challenge together with an influencer, launched on different social media channels
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Material aspect 1: our actions in 2021
We delivered 4 new validated targets
We nominated 2 new preclinical candidates, all with a novel mechanism of action
We conducted 3 Proof of Concept trials
We received 1 regulatory approval for an additional indication for filgotinib in
Europe and most recently in 2022 in Great Britain
In 2021, we responded to 682 inquiries through the Galapagos Medical
Information service for Jyseleca, our marketed product, and our product
candidates in development
Since 2009 our scientific efforts in research and development brought us to 49
preclinical candidates, most of which have novel modes of action. Of these, 24 have
entered the clinic, 18 of which are expected to have novel modes of action.
We launched a digital challenge on social media to spark STEM with young
people, reaching 121,100 views on social channels for our Dutch challenge, while
developing a French challenge ready for launch in 2022
We developed the Patient Partnership Charter, defining what we stand for, what
partnering with patients means to us, and our approach and commitments to
working with and for patients
We launched the Galapagos Health information portal for healthcare
professionals
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49151824preclinical candidatesentered clinicnovel modes of actionnovel modes of action in patient studies CSR REPORT
Future ambitions
Set up the Galapagos Patient Engagement Council as a consultative body,
advising Galapagos on patient engagement-related topics, and as a knowledge
exchange platform between Galapagos and the patient community
Invest in our target discovery capabilities, to broaden our pool of targets, and
deliver more validated targets and Proof of Concepts on a yearly basis
Continue to seek win-win collaborations to bolster the early-stage pipeline and
endorse our innovative approach
Diligently scout for potential external business development opportunities to
strengthen our pipeline
Further strengthen our European commercial organization to bring innovation to
patients in need of breakthrough medicines
€4.7B
Current Financial
Investments, cash
and cash
equivalents at end
2021
A strong balance
sheet to ensure
future growth, both
internally and
through externally
sourced
opportunities
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Material aspect 2: Our employees are the
strength behind Galapagos
Employees are the key to our success in developing novel mechanism of action drugs that have
the potential to make a real difference for patients. Attracting, inspiring and retaining employees
and making Galapagos a great place to work are essential for the success of our company. Our
approach to talent stems from our corporate values and strategic talent initiatives.
‘MakeitHappen’ is core to our culture: people feel they can make an impact in our organization,
which is highly motivating. We ensure that this value is protected and managed as we continue
to develop as an organization.
We are dedicated to continuing to build a diverse workforce and to fostering an inclusive, open
and supportive work environment across our locations in Europe and the U.S.
As we aim to expand our differentiated pipeline in 2022, while rolling out our first marketed
product across Europe, our organization continues to develop and build expertise.
Gender Equality
We strive for gender equality across multiple dimensions,
including talent attraction, female
leadership, and talent pipeline development, pay, creation of an inclusive culture. We foster a
diverse and inclusive organization and protect each other against all forms of harassment and
discrimination. We support gender equality through policy development, representation, and
transparency.
In 2021, we celebrated the International Day of Women and Girls in Science, endorsing equal
access to, and participation in, science for women and girls. 60% of our R&D colleagues are
women and their talent and dedication are essential in our aim to help patients now and in the
future.
As described in the section on Material Aspect 1, we are part a consortium of companies working
on Science, Technology, Engineering, and Mathematics (STEM) initiatives for youngsters, with a
key focus on sparking interest in STEM amongst girls via targeted social media outreach that
speaks to them (www.dasgeniaal.be and www.cestgenial.be).
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As a result of our initiatives, for the third year in a row we are
included in the 2022 Bloomberg Gender-Equality Index, an
achievement that we are very proud of. The Bloomberg Gender-
tracks the
Equality Index is an objective measure that
performance of public companies committed to disclosing efforts
to support gender equality. The list encompasses 418 companies
headquartered in 45 countries and regions, across 11 sectors.
Diversity
Our approach to diversity is deeply rooted in our culture and values. We strive for inclusion and
diversity across gender, nationality, ethnicity, experience level, and disability, as detailed in below
section. This is reflected in our decisions and actions as our company grows and evolves.
Our group in numbers
Number of employees Galapagos group
1,309
gender:
education:
750
women
9%
other
27%
PhD
23%
Bachelor
41%
Master
Average age:
43
595
Nationalities:
42
Average years of service:
Employee turnover:
New hires in 2021:
3.74
8.81%
328
Total number of employees includes consultants and temporary staff.
We attracted 328 new employees in 2021, 55% of whom are women
We continue to attract people from various backgrounds and now have 42 different
nationalities within the Galapagos group.
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Our supervisory board currently consists of eight members, 4 of whom are women (please
see the section Supervisory board of our Annual Report 2021 for further information on
each board member)
Our management board consists of 5 men (please see the section Management board of
our Annual Report 2021 for further information on each board member)
Total workforce:
43%
men
57%
women
men
3.60 years
women
3.81 years
55%
men
45%
women
45%
men
55%
women
37%
men
63%
women
Human capital management
Our corporate culture
At Galapagos, we believe a strong culture is fundamental to our business success. Our spirit
of challenging ourselves without fear of failure underpins our work. Since this boldness is
fundamental to us – and we recruit exceptional people who are the right fit – we have defined
our culture in a behavioral framework as follows:
We act as a pioneer and are optimistic in our ambitions, motivated by innovation and
attracted by the unknown
We positively embrace change and adapt to circumstances. Failing on occasion doesn’t deter
us; it’s how we pick ourselves up that matters
We challenge ourselves and, in doing so, raise the bar of what is possible
Together, we want to create value and improve lives through science – and we continuously
strive to find ways to make it happen
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As new colleagues from different backgrounds join us, we want to ensure our culture evolves
accordingly. We continue to develop structured, integrated systems and onboarding practices
that help us look in the same direction, because our culture transcends everything we do.
We invest in our employees
Our employees are at the core of everything we do.
In our continued efforts to enable a
great experience at Galapagos, we offer our employees the platform to grow, develop, fail,
learn, and succeed. Our ambitious business strategy offers great opportunities to keep pushing
boundaries and enhance skills and competencies with the aim of delivering innovative science
and breakthrough medicines to patients. We honor our successes, while constantly raising the
bar and allowing room for trial and error to drive innovation. We encourage our people to take
ownership, be entrepreneurial, and make a difference.
At Galapagos, we offer competitive and evolving remuneration packages to reward, recognize,
develop, and retain our employees in a way that aligns with the company’s strategy and culture.
for many employees, share-related opportunities, help drive
Performance bonuses and,
sustainable performance and commitment, and reward employees for their contributions to our
success.
The benefits we offer vary from country to country, based on local customs and statutory
conditions. Employee benefits include insurance for critical risks and key life events, as well as
provisions for different forms of leave in support of work-life balance.
We aim to ensure an inclusive, open, and supportive professional environment across our
international locations. We organize regular engagement meetings across all our business units
to inspire and align teams behind our vision and ambition. Informal sessions with members of
our management board help to inspire new and long-term employees across our different sites.
We listen to our people through formal and informal channels established to ensure openness
and psychological safety. Focused surveys evaluate our actions, impact, and the agility of our
people processes and help us enhance the employee experience.
During the COVID pandemic, we helped employees manage this health crisis by providing
additional electronic equipment to facilitate working from home, organizing online mindfulness
sessions, and paying a stipend to cover the additional costs incurred through working from
home. We also undertook initiatives to create team cohesion and strengthen the feeling of
belonging to the Galapagos family.
We engage with local communities and charities
We want to be part of the communities in which we work and live. In 2021, we transformed our
annual Company Day, where we traditionally devote time to a range of social organizations and
green initiatives, into a cross-site 'We Care' initiative. Across our different locations, we engaged
with social and nature conservation organizations in a concerted way.
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Material aspect 2: our actions in 2021
In 2021, talent engagement and retention became a clear priority, and a range of
activities supported this:
In 2021, we improved our candidate experience. Our governance, planning and
approach in the continued period of pandemic led to an increased use of
assessment and recruitment tools to assure and ensure talent fit with the
culture of the company. Virtual conversations and case-based presentations
aided the process
We consistently partnered with colleagues to promote references and build a
pipeline of talent, in line with our goal to hire and develop diverse talent
As we established operations across Europe, our talent base has become more
international and diverse, too
Onboarding was refined, to become more efficient, robust, and attractive. It led
to a smooth integration with our culture and values, motivating new colleagues
to find their way in the organization, understand what is expected from them
and know what systems and tools to use. All colleagues joining from Gilead in
our commercial organization participated in culture and value workshops to fully
embed them in our company DNA. All newcomers got assigned a ‘buddy’ as
guide and support for any questions during the first months
Employee well-being is critical to our success. In the context of the continued
pandemic, managers engaged in 'How are you' conversations with their team
members. More than ever, we wanted to make sure that every employee felt
safe, listened to, and cared for
We focused on enhancing the performance and unlocking the potential of all
employees by promoting the development of personal and professional skills. To
support continued development during the pandemic, learning journeys
remained virtual, with team building adapted to online and hybrid experiences
We capitalized on internal lateral mobility, which is demonstrated by the fact that
about 95 colleagues (of which 60% women) were assigned new roles with
increased responsibilities in 2021
Regular performance and development conversations played a crucial role in
ensuring we remain performance-oriented and develop employees for current
and future roles
We have created a financial support package for remote working, rolled-out new
family leave policies and an annual stock-based program, and improved various
local benefit offerings
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We set the stage to achieve digital ambitions for HR, with the successful launch
of SAP SuccessFactors. We initiated the employee self-service journey, supported
by strong change management and user-adoption practices to ensure a smooth
launch. We now have the architecture and analytics to consistently report on key
HR KPIs going forward and generate insights that matter to the business
We hired and onboarded 328 new colleagues, 80 of whom came from our
collaboration partner Gilead, as we took over the commercialization of Jyseleca
in regions in Europe that were initially covered by Gilead. We significantly
expanded our commercial organization and set up operations in six countries
(i.e. Austria, Finland, Sweden, Norway, Denmark, and Republic of Ireland) to
realize our ambition to become marketing authorization holder for Jyseleca in
Europe. We unfortunately had to rightsize our R&D and Shared Services
departments in view of our revised R&D portfolio following pipeline setbacks
Following recent events and in response to the strategic reset during the year,
we invested in regular communication plans, with extensive Questions and
Answers for senior leaders, to equip them to be closer to their teams.
Transparent presentations during townhall meetings helped employees put the
corporate news in perspective and maintain trust in our ability to overcome
headwinds with a plan and commitment
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Future ambitions
‘We Care’ is part of our community engagement approach and we remain
committed to several initiatives, including:
supporting local STEM initiatives throughout our different sites
donating IT materials to local organizations for educational support
giving employees the opportunity to share any volunteering initiative on our
internal communication Yammer platform and allow others to engage
behind
The recruitment team will continue to focus on ensuring quality recruitment
externally but also supporting the internal redeployment and talent mobility
processes. We aim to improve our employer branding position via social media
campaigns and other career channels etc. to inspire and increase our outreach
At Galapagos, we continue to engage with early talents by collaborating with
universities/schools/academia to increase talent inflow via internships and/or
young graduate hire. Early pipelining is seen as a way to diversify the talent pool
and as a long-term objective to develop young talents into the leaders of the
future. We plan to remain competitive, evolving towards integrated talent
management that includes our employees, consultants, and our contingent
workforce
Our ambition is to improve the competitiveness of our talent and our
organization, and have a highly engaged workforce. We create opportunities for
our leaders to role model key behaviors, embody corporate values and create
the context for their teams to excel. Programs that generate transformative
learning in the space of personal and professional excellence will continually be
upgraded, while we embark on building strategic capabilities. We will continue to
enhance awareness of compliance and regulatory practices in a systematic way.
This journey will be further sharpened and enhanced towards establishing our
platform for success to promote growth in performance and potential in line
with industry benchmarks to prepare our workforce for the future
We continue to adopt cutting edge and digital solutions to boost candidate and
employee experience. Deployment of empowering people processes by
continuous improvement and streamlining, investing in the scalability and
consistency of our processes across the whole organization, will be instrumental
to success. We continue to invest in intuitive solutions to simplify HR processes
and employee self-service. To enhance the employee experience, we aim to
deploy digital tools that will provide them with solutions via a dedicated
knowledge base
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Our focus will continue to be on evolving our competitive remuneration package
to support the attraction, retention, and engagement of talented employees,
helping Galapagos differentiate itself and creating a competitive advantage. In
particular, we hope to drive forward our wellbeing offering as a company and
explore further possibilities around the future of mobility. In addition, we will
look for further opportunities to bring to life our remuneration principles,
including reinforcing linkages between pay and performance, enabling
employees to share in the company’s success in alignment with shareholder
interests, remaining competitive in existing and new geographic markets, and
supporting employees and their families with locally relevant employee benefits
We will continue to drive and enable both mindset and practice when it comes to
organization agility. It starts with building a resilient organization, having the right
strategic capabilities and remaining highly responsive to our people and to the
context we operate in. Further, leadership and line manager capabilities will be
strengthened, internal mobility boosted along with our approaches to retain and
grow our talents, offering them diverse experiences across projects and
programs
We will continue to deploy initiatives to foster our strong culture to drive
innovation in science and make differentiating medicines available to as many
patients as possible. Increased focus on wellbeing, recognition and CSR
programs will contribute to becoming an even more inspiring, inclusive place to
work, where people can become their best selves. Our people are our
ambassadors. We put them in the spotlight and visualize how proud they are to
work for Galapagos and how proud the company is to work with such amazing
talents. We have an inclusive atmosphere of bringing people together from
various backgrounds to collaborate and deliver on meaningful solutions, both
internally within the company and as well as to our patients
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Material aspect 3: Conducting business
ethically and responsibly
Our core business is the discovery and development of drugs with novel modes of action, and we
prioritize ethical behavior in all its aspects.
We believe that ethical behavior is particularly important and inherent to our business:
in
preclinical and clinical trials, expanded access to medicines currently in development for patients
who are not eligible to enroll in clinical trials, clear and adequate information to patients, clinical
trials that are tailored to the needs of patients and investigational site staff and our codes of
ethical conduct.
To ensure our business is compliant with regulatory and corporate policies, and that we conduct
business in an ethical way, we have developed a Compliance and Ethics Program, available on
our company intranet.
Animal welfare in drug development
Regulatory authorities worldwide require that new medicines are evaluated in both animals and
humans to ensure the quality, safety and efficacy of these products before granting approval.
Without animal testing, no new medicines would be approved.
We created the Galapagos Animal Welfare Committee in 2019 to oversee animal welfare activities
and to support the scientists in charge of animal testing. The Animal Welfare Committee put a
framework in place to enforce animal welfare best standards (policy, KPI, laboratory evaluations
and audits, recommendations, mitigation and corrective actions, regulatory and legal actions)
and to ascertain that our ethical values are well understood by our partners. The Animal Welfare
Committee reports directly to the Development and Research Management Committees and
CEO of Galapagos, and in addition to its advisory role, the Committee will regularly evaluate
animal study practices.
Galapagos explicitly forbids the unethical treatment of animals, such as neglect or cruelty, and
strives to provide animals with a good quality of life, while constantly seeking ways to make
improvements.
For non-clinical studies, including those that assess efficacy and safety of our product candidates,
we firmly stand behind the 'Three Rs’ principle: Refinement, Reduction, and Replacement. The
Three Rs principle is based on the premise that animals should be used only if a scientist’s best
efforts to find a non-animal alternative have failed, and that when animals are needed, only the
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most humane methods should be used on the smallest number of animals required to obtain
valid information.
We have implemented practices that demonstrate our commitment and responsibility to refine,
reduce and replace non-clinical testing involving use of animals to the greatest extent possible,
and we will continue to research, promote, and implement alternative methods. We make more
frequent use of in silico (computer modelling) and in vitro (cellular testing) study designs and
approaches. Examples are the implementation of new modelling and simulation approaches for
supporting the toxicity assessment of our compounds as well as the use of invitrocardiomyocyte
assays to allow for the early assessment of potential cardiotoxicity issues. Other improvements
include the implementation of new pharmacological models
reducing animal-based
development or the review of procedures by the ethical and animal welfare committees.
We are engaged in several partnerships, including the Virtual Human Platform, an organization
that aims to accelerate the transition to animal-free safety assessments through innovation in
data science, human tissue culture models and transition management.
Our focus on animal welfare triggers a continuous improvement of, amongst others, the housing
conditions of animals (group vs single housing, size of cages), enrichment of the animal
environment (food, games, social activities), reviewing any irregularities, and the commitment to
immediate action. We expect the same ethos from third parties we work with such as Contract
Research Organizations (CROs) and academia. We carry out a thorough assessment of all third
parties and release an animal welfare policy that clarifies our expectations.
In Europe, compliance with Directive 2010/63/EU forms part of the pre-assessment and selection
process of the European laboratories that we use for non-clinical testing, and we monitor animal
welfare in the laboratories we engage with on a regular basis. Outside the European Union,
we require compliance in laboratories with local animal welfare regulations. In the U.S., for
example, we only work with laboratories that are accredited by the Association for Assessment
and Accreditation of Laboratory Animal Care. We also follow the national regulations defining
high standards for animal welfare for our internal studies in France. We systematically submit our
projects to the National Authorities for ethical approval and are regularly inspected in order to
maintain the highest accreditations.
Our clinical trials ethics
Galapagos sponsors and conducts clinical trials in accordance with applicable international
standards. The fundamental guidelines are the Declaration of Helsinki (and its amendments)
and Good Clinical Practice (including amendments), as well as Good Pharmacovigilance
Practice guidelines of the International Council for Harmonization. Our adherence to these
internationally recognized guidelines ensures the rights, safety, and well-being of participants in
our clinical trials.
for
In addition, other international guidelines such as The Belmont Report, Council
Coordination of International Medical Congresses guidelines, The Nuremberg Code, United
National Educational, Scientific and Cultural Organization’s (UNESCO) Declaration on Bioethics
and Human Rights form the ethical foundation for our trial activities. We comply with laws
and regulations in the countries/regions in which we are conducting our trials, including the
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U.S. Code of Federal Regulations, the EU Directive on Clinical Trials and the EU Clinical
Trial Regulation (when applicable). Furthermore, we uphold our own internal procedures and
standards for clinical trials, irrespective of the country in which the trial is conducted. Overall, it
is our policy that the interest, safety, and well-being of trial participants and patients will always
supersede those of science and commerce.
Our trials are only initiated if they are scientifically and medically justified and when they are
externally validated by clinical experts. Moreover, they will always be reviewed by local health
authorities and ethical committees before initiation. Trial participants (or their legally authorized
representative) must give written consent after being properly informed of the trial, including the
risks and potential benefits. Participants are duly informed that they can withdraw from the trial
at any time, without any explanation, and then will receive appropriate care.
We, or our representatives, conduct regular site monitoring visits to ensure that clinical trials
are conducted in accordance with the applicable approved study protocol. Adverse events are
monitored and reported to authorities and ethical committees as needed, and appropriate
actions are taken when needed. Our Safety Monitoring Committee enables timely evaluation of
accumulating safety data of ongoing studies and adopts risk-management strategies to support
safe and ethical conduct of Galapagos studies.
An Independent Data Monitoring Committee (IDMC) may be introduced to act as an advisor to
Galapagos on whether to continue, modify, or terminate a trial based on periodic assessment of
trial data. The IDMCs are independent from Galapagos and are composed of members with no
conflicts of interest.
Our trials ensure proper indemnification of participants in case a product candidate or trial
procedure causes bodily harm.
We favor transparency and therefore, independent of the outcome, make patient study results
available to physicians and researchers, with full consideration for protection of patient data
privacy and commercial confidentiality. We report the outcome in accordance with the CONSORT
Statement, or Consolidated Standards of Reporting Trials, designed to improve transparency
around clinical trials.
Clinical trials and summary results are registered on Clinicaltrials.gov and/or the EU Clinical Trials
Register. Starting 1 January 2021, we committed to registering Galapagos sponsored Phase 1 to
4 clinical trials conducted in any geographical territory. We commit to making a summary of
the results of Galapagos-sponsored Phase 2 to 4 clinical trials publicly available within 6 months
of completion for pediatric studies, and 12 months for adult studies. As discussed above in
Material aspect 1, we provide publicly available open access to our publications in peer-reviewed
journals free of charge. We attempt to publish results in peer-reviewed journals, in accordance with
Good Publication Practice and the International Committee of Medical Journal Editor’s Uniform
Requirements for Manuscripts Submitted to Biomedical Journals, and at relevant scientific
meetings and congresses. As a publicly listed company, we also have the obligation to communicate
trial results by other means to the investor community, such as via press releases.
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In some rare cases, patients are unable to participate in clinical trials and have exhausted
all available treatment options. Here, Galapagos has a policy in place to assess whether the
investigational product can be offered to a patient outside of a clinical trial, through a program
called 'expanded access’, also often referred to as 'compassionate use’. A full copy of our
Expanded Access Policy can be found on our website.
Patient safety for our first marketed product
We currently have one product, Jyseleca, on the market in the European Union, and Great
Britain. Adverse events and other information relevant to assess the benefit/risk profile of
Jyseleca are collected and evaluated by Galapagos in the frame of its pharmacovigilance system.
Individual and aggregated reports are submitted to the authorities as required. When needed,
appropriate actions are taken to ensure a positive benefit/risk balance for our patients. The
Safety Management Team, overseen by the Safety Board, enables timely evaluation of
accumulating safety data and adopts risk-management strategies to support the marketed
product. Galapagos has a Qualified Person for Pharmacovigilance who ensures the function
of the pharmacovigilance system and continuous monitoring of the benefit/risk profile of
Galapagos’ marketed products.
Our Code of Conduct
In 2021, we refined our Code of Conduct to fully reflect what it means to ‘Make it Happen the
Right Way’ at Galapagos.
Like a compass, our Code is there to navigate and steer us in the right direction, enabling us to
feel confident and proud of the choices we make, however hard they may be.
The new Code includes specific guidance to ensure that we live by the principles that are
important to us, as members of the Galapagos team:
Putting patients first
Acting ethically and with integrity
Being thoughtful and considered in our actions
Speaking up for what is right
Maintaining individuality and diversity
Holding ourselves accountable for our actions
Galapagos’ supervisory board is responsible for administering the Code. Our Compliance &
Ethics function is responsible to for designing and implementing the code through our
Compliance & Ethics Program and this is done in close collaboration with our General Counsel.
We expect our supervisory board members, management board members, and employees to
exercise reasonable judgment when conducting our business and encourage them to refer to
this Code frequently to ensure that they are acting within both the letter and the spirit of this
Code.
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We expect our employees and third-party suppliers to conduct business ethically, with integrity
and respect for human rights. We expect them to turn away from conflicts of interest, corruption,
and fraud. All Galapagos employees and officers are required to read and absorb the Code which
is also available on our company website. Our suppliers are required to adhere to contractual
terms that include anti-bribery and anti-corruption provisions. We consider CSR criteria in our
vendor selection process as appropriate for the type of vendor that we are working with. Our
general terms and conditions of purchase also contain a specific clause on anti-bribery and anti-
corruption.
Making it Happen the Right Way - The Making Of…
Time for Change: the Why…
As an organization, we are coming through some significant changes not least having recently
been joined by our colleagues from Gilead. So now, more than ever, it is of key importance that
we take the time to think about our culture and what it means to be a member of the Galapagos
team; No better time for us to launch our new Code.
Like a compass, our Code is there to navigateus and steer us in the rightdirection, enabling us
to feel confident and proud of the choices we make, however hard they may be.
Meet our Compliance & Ethics Team: the Who…
The project to revamp our new Code of Conduct was led by our Compliance & Ethics team,
headed by Stephanie Wingrove, our Head of Compliance & Ethics. We asked her and the team
what inspired them to create this new Code;
Q: The new Code looks and feels dramatically different
to our old Code, and to those of the majority of our
peers. What inspired you?
A: Our team was really keen to create something that
was unique to Galapagos. As a team, we are interested
in how we can use the principles of behavioral science
to influence behavior within our organization and this
was at the forefront of our minds when we were
creating the Code.
Q: Could you give us an example of how you did this?
Stephanie Wingrove, Head of Compliance &
Ethics
it was really
A: Yes, we have a few! For example,
important that the language, tone and imagery we used
was likely to trigger an emotional response in our
readers. This is important because by doing this, the
document is far more likely to resonate with our people and to stick in their minds. People are
far more likely to “sign up” to a Code that has made them feel something and which aligns with
their own personal values.
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Q: The Code incorporates quotes from employees across our organization- why did you choose
to include these?
A: This was about more than just including the quotes in our Code. For us, it was key that our
employees were engaged in the process of building the code and that their contributions played
a part in the final product- this is so important to ensure buy-in. As you can imagine, we received
a high number of quotes, and unfortunately not all could be included in the Code itself. But they
weren’t wasted; we incorporated these into our communications campaign for the new Code so
that everyone who participated saw the value of their contribution.
Q: This all sounds great. So, what next for the Code and the Compliance & Ethics team?
A: Well, Chapter 4 of our Code states that at Galapagos, we Speak Up for what is right. Cultivating
an environment in which every member of our team feels safe and empowered to use their voice
is a key part of building a strong culture. So, we will be rolling our Speak Up/ Listen Up campaign
over the course of 2022. We’d love to come back next year to tell you all about it!
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Not your average Code of Conduct: the How…
We raised the Bar
By creating a Code that stands out from anyone else’s. A Code that others will want to
emulate
We chose a title that reflects and connects with who we are
Aligned with our corporate vales and therefore meaningful to every member of
our organization
Custom-made and unique to Galapagos- not something that could be copied
and pasted into any other organization. Resonates uniquely with Galapagos
team members
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We Made it Happen
By creating a Code that helps every member of the Galapagos team to make it happen
the right way
We must not only imagine a better future for patients; we must work consistently:
make it happen to make a difference and do it the right way to harvest meaningful
and lasting results. We must prioritize humanity and quality above all.
Alessandra Oortwijn
Senior Medical Director
Every member of the Galapagos team was asked to provide their thoughts on
what “Making it Happen the Right Way” meant to them
Our Code was built with these thoughts as our foundation and throughout the
Code, are quotes provided by members of our team
Our Code was built by Galapagos people, for Galapagos people
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Material aspect 3, our actions in 2021:
Animal welfare
The Animal Welfare Committee took more than 20 major 'Refine, Reduce,
Replace’ initiatives and made decisions in line with our ‘Three Rs’ philosophy, and
these decisions informed the selection process for non-clinical partners
Clinical trial ethics
We launched the Galapagos Clinical Trials Portal in order to increase clinical
trial awareness and understanding for patients, their caregivers and healthcare
professionals. The portal includes a clinical trials finder for Galapagos later-stage
trials, and provides support to empower patients in preparing a clinical trials
conversation with their healthcare professional
In order to help patients make a well informed decision on potential clinical trials
participation, we redesigned our Informed Consent template in accordance with
the Health Literacy principles, taking into account applicable regulations
Code of Conduct
Since the launch of our new Code of Conduct in 2021, 93.5% of our employees
completed the training on our new Code of Conduct
During the onboarding process of new employees, we emphasize the
importance of our Compliance and Ethics Program, our Code of Conduct and
indicate all the channels available to them to raise questions and concerns
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Future ambitions
Animal welfare
Our Animal Welfare Committee will continue to evaluate our internal processes
and KPIs regarding animal welfare for all our internal and external facilities
We will monitor progress and report on it every year
Clinical trials ethics
We will systematically embed the voice and needs of patients and healthcare
professionals in our late-stage clinical trials
We will share accessible study results summaries with study participants and the
wider public for all Galapagos sponsored interventional trials in patients,
regardless of their location
We will explore innovative tools and processes to reduce clinical trial burden on
patients and sites
We will share easy to understand study results with patients, as per EU Clinical
Trial Directive No 536/2014
Code of Conduct
We will further strengthen the Galapagos Compliance and Ethics Program to
meet the changing needs of our organization through:
Continuing to promote our culture of speaking up, both internally and with
external stakeholders
Further refining our third-party oversight through an enhanced risk
assessment framework and due diligence
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Material aspect 4: We care about the
environment, health, and safety
Our mission is to bring innovative medicines with novel modes of action to patients suffering
from severe diseases in the most sustainable way, caring about the health, safety and well-
being of our employees and respecting our planet by keeping our environmental footprint to a
minimum.
To render this more tangible, in 2021 we issued a global environmental, health and safety (EHS)
policy, defining key operational guidelines focusing on:
1. Ensuring regulatory compliance:
As we operate in a highly regulated sector which is subject to a set of strict laws and regulations
related to environmental impact, well-being and safety of employees, we identify, evaluate and
comply with all applicable EHS laws, in all countries in which Galapagos operates.
2. Growing sustainable operations:
To prevent work-related injury and illness, we provide safe and healthy working conditions
that are appropriate to the specific nature of the EHS risks to which workers and others are
exposed;
We minimize the organization’s carbon footprint and the creation of pollution and waste from
our operations throughout our value chain;
We strive to diminish our consumption of natural resources, using sustainable resources
where possible;
We pursue, evaluate and eliminate the health and safety risks to which our employees and
service suppliers are exposed, to prevent any incidents or accidents;
We foster openness and dialogue on EHS matters with our employees, employee
representatives and internal and external stakeholders;
We educate, train, motivate and involve Galapagos employees to work in a safe and
environmentally responsible manner, making every employee responsible for protecting
people and environment in and around their workplace.
Our health and safety performance data for 2021 show that no fatalities because of work-related
injuries or work-related ill-health were reported, nor did we have any high-consequence work-
related injuries.
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In accordance with the Global Reporting Initiative Standard 403 on Occupational Health and
Safety the following data, related to employees on Galapagos’ payroll, can be provided:
Absolute number of fatalities as a result of a work-related injury
Absolute number of high-consequence work-related injuries
Absolute number of recordable work-related injuries
Rate of fatalities as a result of a work-related injury
Rate of high-consequence work-related injuries
Rate of recordable work-related injuries (per 200.000 hours worked)
Absolute number of fatalities as a result of work-related ill health
0
0
2
0
0
0.18
0
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Material aspect 4: our actions in 2021
Whilst a hybrid working policy was offered as a guidance for teams to start
working in the ‘next normal’ and to decide what works best for them during and
beyond the pandemic, specific measures to mitigate pandemic-related health
and safety risks were discussed at the newly established Cross-Site Operations
Meeting. These discussions resulted in global travel guidelines, guidance on
organizing and attending internal and external events, as well as habits to
consistently keep hygiene rules in mind. Thanks to disciplined adherence,
operations in 2021 were hardly impacted by the pandemic
The pandemic also led to an increased focus on physical and mental well-being,
aimed at providing employees with optimal working conditions whether at home
or at a Galapagos location. Specific actions included: surveys aimed at identifying
psychosocial risks, training sessions for line management aimed at recognizing
early symptoms of burn-out, a cash allowance to help install and maintain a
professional working environment at home, ergonomic training sessions aimed
at optimizing workstations at home, and mindfulness sessions. A first voluntary,
global vaccination campaign against the seasonal flu was successfully launched
Additional joint health and safety committees were established to ensure that
potential issues are proactively addressed, and proposed programs are
constructively challenged and optimized
We supported new operations in six countries, set up to grow our
commercialization efforts as part of an overall commercial ambition, by creating
a network of EHS experts providing country-specific advice on employee health,
safety, and wellbeing
Within this context, we strengthened our product stewardship capabilities to
ensure compliance with any Registration, Evaluation, Authorization and
Restriction of Chemicals (REACH) requirements
Criteria addressing social and environmental sustainability were included in the
selection processes of key vendors such as facility management providers and
contract manufacturing organizations, as well as in the design of any new
facilities (where BREEAM1 and WELL2 guidelines are applied), and certification is
sought when appropriate
1
2
BREEAM is a profound sustainability assessment for masterplanning projects, infrastructure, and building. It recognises
and reflects the value in higher performing assets across the built environment lifecycle, from new construction to in-use
and refurbishment.
The WELL Building Standard takes a holistic approach to health in the built environment addressing behavior, operations
and design, and is a performance-based system for measuring, certifying, and monitoring features of the built
environment that impact human health and well-being, through air, water, nourishment, light, fitness, comfort and mind.
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Future ambitions
As part of our CSR strategy, we will define a long-term ambition, qualitative and
quantitative objectives and an implementation roadmap focusing on optimizing
employee health, safety, and well-being, promoting a circular mindset, and
minimizing our carbon footprint throughout our value chain. We will identify
relevant performance indicators to measure and report on the progress we
make and for inclusion in future reports
In support of this, we will launch specific 'Planet' and 'Wellbeing' workstreams at
global and local level to co-create and implement the roadmaps, also leveraging
existing initiatives such as 'Next Ways of Working'
To raise awareness and boost engagement, we will start celebrating the United
Nation’s World Safety Day on 28 April and World Environment Day on 5 June
We will define our ecological footprint, focusing on scope 1, 2 and 3 carbon
emissions, water consumption and waste management
We will include any agreed ambitions, objectives, and initiatives in our EHS
Management Systems aimed at mitigating any related risks
We will specifically review our processes related to emergency response,
maintenance management and contractor management, and integrate them
into a newly created Data Management System
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CSR at Galapagos – Summary
Material Aspect 1: Improving people’s lives
SDG
Areas of engagement
We are pioneering for patients and our mission is to discover and develop innovative
medicines that address high unmet medical needs
Our science and innovation are based on our flexible target discovery platform
We are building a differentiated early-stage R&D pipeline
We accelerate innovation through win-win partnerships
We actively promote an open innovation model
We promote careers in science by engaging in STEM initiatives
Go to chapter
Material Aspect 2: Our employees are the strength behind
Galapagos
SDG
Areas of engagement
We strive for gender equality and an inclusive and diverse workforce
We invest in our employees
We engage with local communities and charities
Go to chapter
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Material Aspect 3: Conducting business ethically and responsibly
SDG
Areas of engagement
Animal welfare in drug development
Our ethical approach to clinical trials
Our Code of Conduct
Go to chapter
Material Aspect 4: We care about the environment, health and
safety
SDG
Areas of engagement
We minimize our environmental impact throughout our value chain
We comply with our sector rules and regulations
We focus on employee health and well-being
Go to chapter
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Reporting on EU Taxonomy
EU Taxonomy 2021 statement
The European Commission’s action plan on financing sustainable growth led to the creation of an
EU classification system for sustainable activities, being an EU taxonomy. As a listed non-financial
company with more than 500 employees, Galapagos is in scope of the European Regulation
2020/852 of 18 June 20201 (the ‘EU Taxonomy Regulation’). For the reporting in 2021, Galapagos
has to disclose the proportion of its 2021 turnover, capital expenditures (‘CapEx’), and operating
expenses (‘OpEx’) eligible under the EU Taxonomy on sustainable activities. In the future eligibility
to the EU Taxonomy will need to be complemented with disclosure on the alignment with the
EU Taxonomy.
The EU Taxonomy Regulation introduces a classification system for environmentally sustainable
activities and an activity is deemed environmentally sustainable if it meets all of the following
overarching criteria:
substantially contributing to at least one of the six environmental objectives of the
EU Taxonomy Regulation: (i) climate change mitigation; (ii) climate change adaptation; (iii)
sustainable use and protection of water and marine resources; (iv) transition to a circular
economy,
(v) pollution prevention and control; and (vi) protection and restoration of
biodiversity and ecosystems;
not significantly harming any of these environmental objectives;
complying with minimum safeguards; and
complying with certain scientifically based technical screening criteria (‘TSCs’) established by
the EU Commission.
The EU has published a catalog of economic activities that can be considered as Taxonomy-
eligible activities for the first two environmental objectives, climate mitigation and climate
adaptation by means of using NACE2 codes. This EU Taxonomy Climate Delegated Act3 covers
the TSCs in relation to these two forgoing environmental objectives for more than 100 activities
within different sectors.
Following analysis of the EU Taxonomy legal framework4 and applying the NACE codes, we do
not consider our core business activities, being discovering, developing and commercializing
innovative medicines, to be in scope of the EU Taxonomy Regulation’s technical annexes on
1
2
3
4
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a
framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088.
Codes of the statistical classification of economic activities in the European Community/Nomenclature statistique des
Activités économiques dans la Communauté Européenne.
Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the
European Parliament and of the Council by establishing the technical screening criteria for determining the conditions
under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change
adaptation and for determining whether that economic activity causes no significant harm to any of the other
environmental objectives.
Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European
Parliament and of the Council by specifying the content and presentation of information to be disclosed by undertakings
subject to Articles 19a or 29a of Directive 2013/34/EU concerning environmentally sustainable economic activities, and
specifying the methodology to comply with that disclosure obligation, and the legislation set forth under footnote 1-3.
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climate change mitigation and climate change adaptation. Our core economic activities qualify as
EU Taxonomy non-eligible activities.
For the determination of turnover, CapEx and OpEx during this analysis, we use the reported
data in the consolidated financial statements included in this report:
Turnover covers all business activities of Galapagos at 31 December 2021 and the
denominator can be reconciled with the 2021 IFRS Total revenue recognized pursuant to
€484.8 million and disclosed in note 6, being the revenues from commercial and
collaboration activities.
CapEx consists of additions to tangible and intangible assets during the financial year 2021
considered before depreciation, amortization and any re-measurements recognized by
Galapagos pursuant to IAS 38. The denominator can be reconciled with the sum of the
lines ‘Additions’ disclosed in notes 13 and 14 (total €63.4 million) of the consolidated financial
statements. The majority of CapEx is associated with building costs of new office spaces in
Belgium and the Netherlands, and is therefore non-eligible for the EU Taxonomy.
OpEx, according to the EU Taxonomy, is determined by the direct non-capitalized costs of
research and development, building renovation measures, short-term leases, maintenance
and repair and any other direct expenditures relating to the day-to-day servicing of assets
of property, plant and equipment by the undertaking or third-party outsources that are
necessary to ensure the continued and effective functioning of such assets. The majority of
OpEx is associated with our R&D expenditure.
Based on available data and the assessment of requirements, we have no eligible activities
to report. Taxonomy eligible Turnover, CapEx and OpEx is 0%, and it is 100% Taxonomy not
eligible. The “non-eligibility” under the EU Taxonomy refers to the fact that our activities currently
remain outside of the scope of the economic activities for which TSCs have been developed
under the Delegated Regulations. We want to clarify that revenues, CapEx and OpEx currently
considered non-eligible under the EU Taxonomy Regulation should not be interpreted as an
indication of our performance in pursuing or achieving certain corporate sustainability objectives
or our “greenness”.
We note that the required disclosures under the EU Taxonomy Regulation will keep evolving and
that we will continue to consider its impact as well as future reporting obligations.
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Corporate
governance
Corporate governance
at Galapagos in 2021
Foundation & Future
CORPORATE GOVERNANCE
Galapagos’ corporate governance policies
As a listed company with its registered office at Mechelen (Belgium), Galapagos NV is required
to apply the Belgian Code of Companies and Associations (the "Belgian Companies Code") and
the 2020 Belgian Corporate Governance Code (the “2020 Code”). Both entered into force on
1 January 2020.
For the reporting year beginning on 1 January 2021, the 2020 Code was our reference code.
On 28 April 2020, following the amendment of our articles of association as a consequence of
the then newly applicable Belgian Companies Code, Galapagos' supervisory board approved an
updated corporate governance charter (which is available on our website, www.glpg.com). The
corporate governance charter applies in addition to the law, Galapagos' articles of association
and the corporate governance provisions included in the Belgian Companies Code and the
2020 Code. It describes the main aspects of corporate governance at Galapagos, including its
governance structure, the terms and functioning of the supervisory and management board and
its committees, and the rules of conduct.
For the reporting year beginning on 1 January 2021, the supervisory board strove to comply with
the rules of the 2020 Code and no deviations from the provisions of 2020 Code occurred. As a
result, this corporate governance statement does not contain any section making reference to
the “comply or explain” principle.
Our governance structure
The 2020 Code requires companies to make an explicit choice for one of the governance
structures provided for in the Belgian Companies Code. As of 28 April 2020, Galapagos has a
two-tier governance structure as provided by the Belgian Companies Code, with the supervisory
board replacing the board of directors, and the management board replacing the executive
committee.
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Two-tier governance structure
The supervisory board is responsible for the general policy and strategy of the company and
has all powers which are specifically reserved for it under the Belgian Companies Code. The
supervisory board also supervises the management board. The management board exercises
all powers which are not reserved for the supervisory board in accordance with the Belgian
Companies Code.
The supervisory board has established an audit committee and a nomination and remuneration
committee. Both have an advisory function. Finally, the management board has delegated the
daily management of the company to one management board member, i.e. its Chief Executive
Officer.
In addition to the information set out below, we refer to the Risk management and Risk factors
sections of this report for a description of the most important characteristics of our internal
control and risk management systems. The Risk management and Risk factors sections are
incorporated by reference in this corporate governance statement.
Proposed change of governance structure
In light of the recent leadership transition, the supervisory board reviewed whether the chosen
governance structure is still appropriate and decided to propose a new governance structure to
the general shareholders’ meeting, being a one-tier governance structure, consisting of a board
of directors and an executive committee to which certain powers are delegated by the board of
directors. On the date of this report, our articles of association have not yet been amended. The
supervisory board invites the shareholders of Galapagos to approve the introduction of a one-
tier governance structure at the occasion of the extraordinary shareholders’ meeting to be held
on 26 April 2022.
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Supervisory board of Galapagos NV
Composition of the supervisory board
Per 31 December 2021, our supervisory board consists of the following members:
Rajesh Parekh, MA, DPhil has served as the Chairman and non-executive member of our
supervisory board since 2004. Dr. Parekh is a General Partner at Advent Life Sciences LLP,
which he joined in 2006. During an academic career at Oxford University, he co-founded Oxford
GlycoSciences PLC, where he served as Chief Scientific Officer and Chief Executive Officer from
1988 until its sale to Celltech Group PLC (now UCB SA) in 2003. He has founded or served
on the boards of several life sciences companies in the United States and Europe including
Avila Therapeutics,
Inc., EUSA Pharma (Europe) Limited, Biocartis NV, Amsterdam Molecular
Therapeutics (AMT) Holding NV (now uniQure), Aura, Inc., Artax, Inc., and Project Paradise Limited.
He was also a member of the supervisory board of the Novartis Venture Fund. Dr. Parekh
currently serves as a member of the board of directors of Advent Life Sciences LLP, Aleta,
Inc., Alpha Anomeric SAS, Amphista Therapeutics Ltd., Arrakis, Inc., Aura Biosciences, Eloxx, Inc.,
Levicept Limited, PE Limited, Pheno Therapeutics Ltd. and Tridek-One Therapeutics SAS. He
received his MA in Biochemistry and DPhil in Molecular Medicine from the University of Oxford,
where he has also been a Senior Research Fellow and Professor.
Howard Rowe, JD has served as a non-executive member of our supervisory board since 2010.
Mr. Rowe is Managing Director at Hayfin Capital Management LLP, where he serves as Head of
Healthcare and is a member of the Investment Committee and Operating Committee. Prior to
joining Hayfin Capital Management LLP, he was a Managing Director with The Goldman Sachs
Group, Inc. where he had multiple healthcare responsibilities over his 12 years at the firm.
His most recent roles at Goldman Sachs were as part of the European Special Situations and
Principal Strategies teams where he established and led the private healthcare investing effort.
During that time he served on the boards of EUSA Pharma (Europe) Limited, Healthcare Brands
International Limited, SmallBone Innovations, Inc., MedAvante, Inc. and Ikonisys, Inc. Prior to
his investing activities, Mr. Rowe was a senior member of the European Healthcare Investment
Banking team, where he advised numerous corporate clients on M&A and corporate finance
activities. Before joining Goldman Sachs, he was a corporate lawyer with the law firm Sullivan &
Cromwell LLP. Mr. Rowe received his Bachelor of Science in Psychobiology from the University of
Southern California and his JD from Harvard Law School.
Katrine Bosley has served as a non-executive member of our supervisory board since 2013. Ms.
Bosley served as the President, Chief Executive Officer and member of the board of directors
of Editas Medicine, Inc. from June 2014 to March 2019. Prior to joining Editas, she was the
Entrepreneur-in-Residence at The Broad Institute from 2013 to 2014. From 2009 to 2012,
she was President, Chief Executive Officer and member of the board of directors of Avila
Therapeutics, Inc., which was acquired by Celgene Corporation in 2012. She served as President,
Celgene Avilomics Research at Celgene in 2012. Prior to her time at Avila Therapeutics she
was Vice President, Strategic Operations at Adnexus, a Bristol-Myers Squibb R&D Company,
and was Vice President, Business Development at Adnexus Therapeutics, Inc. before that. Ms.
Bosley joined Adnexus Therapeutics from Biogen Idec, Inc. where she had roles in business
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CORPORATE GOVERNANCE
development, commercial operations and portfolio strategy in the United States and Europe.
Ms. Bosley graduated from Cornell University with a B.A. in Biology. She served on the board
of the Biotechnology Innovation Organization and currently serves on the boards of Genocea
Biosciences, Inc., and of the Massachusetts Eye and Ear Institute. Ms. Bosley also serves as
chairman of the board of Arrakis Therapeutics.
Mary Kerr, Ph.D., has served as non-executive member of our supervisory board since
26 July 2016 and is Chief Executive Officer of NeRRe Therapeutics. She was Co-Founder and
CEO of KaNDy Therapeutics until the company was acquired by Bayer in September 2020
for an upfront consideration of $425 million, potential development and regulatory milestone
payments of up to $450 million, followed by potential additional triple digit million sales milestone
payments. Before her career in Biotech, Dr. Kerr held a range of senior leadership roles at GSK
over more than 20 years, including Senior Vice President and Global Franchise leader for the
Immuno-inflammation and Infectious Diseases franchise. Mary was a founding member and on
the Corporate Executive team of ViiV Healthcare. She has spent most of her career on the
R&D commercial interface in global strategy and regional operational roles, predominantly in
the specialty and orphan space. Dr. Kerr gained a Ph.D. in Pharmacology at the University of
Bradford, did post-doctoral research at the Michigan Cancer Foundation in Detroit, and has an
MBA from the University of Kingston.
Peter Guenter has served as a non-executive member of our supervisory board since 30 April
2019. Mr. Guenter is a member of the Executive Board of Merck KGaA and Chief Executive Officer
of Healthcare since January 2021. Before joining Merck, he served as Chief Executive Officer
of Almirall from 2017 to 2020. Prior to joining Almirall, he worked at Sanofi for 22 years, most
recently as Executive Vice President Diabetes and Cardiovascular Global Business Unit. During
his tenure at Sanofi, he held many senior positions including Vice President Eastern Europe
and Northern Europe, Vice President Business Management and Support, General Manager
Germany, Senior Vice President Europe, Executive Vice President Global Commercial Operations
and Executive Vice President General Medicine and Emerging Markets. He was a member of
Sanofi’s Executive Committee from 2013 till August 2017. Before joining Sanofi, he held different
positions in sales and marketing at Smith Kline and Ciba Geigy. Mr. Guenter is currently also a
member of the board of the European Federation of Pharmaceutical Industries and Associations
(EFPIA). He is a Belgian citizen and holds a Master’s Degree in Physical Education from the Faculty
of Medicine and Health Sciences, University of Ghent.
Daniel O’Day has served as a non-executive member of our supervisory board since 22 October
2019. Mr. O’Day is Chairman of the board of directors and Chief Executive Officer of Gilead
Sciences, which employs more than 14,000 people worldwide. Prior to joining Gilead in 2019,
Mr. O’Day served as the Chief Executive Officer of Roche Pharmaceuticals. His career at Roche
spanned more than three decades, during which he held several executive positions in the
company’s pharmaceutical and diagnostics divisions in North America, Europe and Asia. He
served as a member of the company’s Corporate Executive Committee, as well as on a number
of public and private boards, including Genentech, Flatiron Health and Foundation Medicine.
Mr. O’Day currently serves on the board of directors for the Pharmaceutical Research and
Manufacturers of America Organization. Mr. O’Day is a U.S. citizen and holds a bachelor’s degree
in biology from Georgetown University and an MBA from Columbia University in New York.
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Innovation as integral component
Linda Higgins, Ph.D. has served as a non-executive member of our supervisory board since
22 October 2019. Linda Slanec Higgins, Ph.D., joined Gilead Sciences, Inc. in 2010 and is currently
Sr. Vice President Research Strategy, Innovation, & Portfolio. In her first ten years at Gilead
she led Biology, significantly expanding the therapeutic area scope and capabilities of the
for Research. She
department. She founded External
previously served as the President & CEO of InteKrin Therapeutics and as Head of Research at
Scios, Inc., a Johnson & Johnson company, where she provided leadership for drug discovery,
preclinical development, and translational medicine. Dr. Higgins
is passionate about
biopharmaceutical discovery and development, and has been dedicated to excellence in applied
scientific research since 1991. She has led projects and departments in multiple therapeutic
areas including CNS, fibrosis, inflammation, cardiovascular, virology, and oncology. Dr. Higgins
built many of these as new areas at Scios and Gilead. Dr. Higgins is a U.S. citizen and earned an
A.B. in Behavioral Physiology from Kenyon College, a Ph.D. in Neurosciences from the University
of California, San Diego School of Medicine, and completed postdoctoral training in Molecular
Genetics at the Howard Hughes Medical Institute at the University of California, Berkeley. She has
authored over 50 original peer reviewed scientific papers and invited reviews and is an inventor
of over a dozen patents. Dr. Higgins serves as a non-executive director on the board of Arcus
Biosciences, Inc. and Tizona Therapeutics, Inc.
Elisabeth Svanberg, MD, Ph.D. has served as a non-executive member of our supervisory
board since 28 April 2020. Elisabeth Svanberg received her MD and PhD from the University
of Gothenburg, Sweden and is a board certified general surgeon and associate professor of
surgery. Dr. Svanberg joined Serono International in 2000, initially in the field of metabolism and
subsequently held roles of increasing responsibilities before joining Bristol Myers Squibb (BMS) in
the United States in 2007. At BMS, Dr. Svanberg served as development leader for a first in class
novel diabetes medicine and subsequently as Head of Medical Affairs for the Intercontinental
region. In 2014, Dr. Svanberg joined Janssen Pharmaceuticals (a Johnson & Johnson Company)
as Vice President, Head of the Established Products group managing a portfolio of 90 products,
used by an estimated 150 million patients globally. Since 2016, Dr. Svanberg serves as the Chief
Development Officer at Ixaltis SA and since 2020 as Chief Medical Officer at Kuste Biopharma,
specialty pharmaceutical companies developing proprietary therapeutics to treat genitourinary
(GU) disorders with unmet medical need. Dr. Svanberg serves as a non-executive director on the
boards of Egetis AB (formerly PledPharma AB) (since 2017), Swedish Orphan Biovitrum AB (SOBI,
since 2018), Pharnext SA (since 2020) and Amolyt Pharma SAS (since 2021).
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About the supervisory board
Galapagos' supervisory board consists of minimum five and maximum nine members. All
supervisory board members are non-executive directors, including the Chairman. At least three
supervisory board members are independent. On 31 December 2021, the supervisory board
consisted of eight members, five of whom are independent within the meaning of article 7:106
juncto article 7:87 of the Belgian Companies Code and provision 3.5 of the 2020 Code.
The supervisory board members are appointed by the shareholders’ meeting upon the proposal
of the supervisory board, for a renewable term of up to four years. Members of the supervisory
board whose mandate has come to an end may be reappointed. When a position on the
supervisory board becomes vacant, the remaining members may temporarily fill the mandate
until the next shareholders’ meeting appoints a new supervisory board member. Each member
of the supervisory board appointed this way by the shareholders’ meeting shall complete the
mandate of the member of the supervisory board he replaces, unless the shareholders’ meeting
decides otherwise. The nomination and remuneration committee nominates, for the approval
of the supervisory board, candidates to fill vacancies and advises on proposals for appointment
originating from shareholders,
in each case taking into account Galapagos’ needs and the
selection criteria determined by the supervisory board.
Supervisory board
member
Position Nationality
Year of
birth
Year of
initial
appointment
Independent
director(1)
Rajesh Parekh
Chairman
British
1960
2004
Howard Rowe
Katrine Bosley
British and
Member
Member
U.S.
U.S.
1969
1968
Mary Kerr
Member
British
1961
Peter Guenter
Member
Belgian
1962
Elisabeth Svanberg
Member
Swedish
1961
Daniel O' Day
Linda Higgins
Member
Member
U.S.
U.S.
1964
1962
2010
2013
2016
2019
2020
2019
2019
●
●
●
●
●
Attendance
rate
100%
93%
93%
100%
67%
100%
87%(2)
93%(2)
(1) Independent director pursuant to article 7:106 juncto article 7:87 of the Belgian Companies Code and 2020 Code.
(2) In September 2021, Galapagos entered into a related party transaction with Gilead within the meaning of article
7:116 of the Belgian Companies Code for the DIVERSITY letter agreement. As Gilead representatives, Mr. O'Day
and Dr. Higgins, only participated in the discussion prior to the deliberation and resolutions and then recused
themselves from the supervisory board meeting. This meeting was taken into account for their attendance rate
and they are considered as excused.
In 2021, the following persons, as identified in the table above, were members of the supervisory
board: Dr. Parekh (Chairman), Mr. Rowe, Ms. Bosley, Dr. Kerr, Mr. Guenter, Mr. O’Day, Dr. Higgins
and Dr. Svanberg. Mr. Rowe, Ms. Bosley, Dr. Kerr, Mr. Guenter and Dr. Svanberg were appointed
as independent supervisory board members within the meaning of article 7:106 juncto article
7:87 of the Belgian Companies Code and provision 3.5 of the 2020 Code. In 2021, the supervisory
board was therefore composed of a majority of independent members.
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At the annual shareholders’ meeting of 28 April 2021, the mandates of Dr. Parekh and Ms. Bosley
were renewed respectively for a term of four years and one year.
In 2021, the supervisory board thus consisted of four women and four men, representing four
different nationalities and different age categories.
During 2021, Galapagos NV complied with the Law of 28 July 2011 with respect to gender
diversification in the supervisory board, and in accordance with article 7:106 of the Belgian
Companies Code, the supervisory board will continue to monitor future compliance. In proposing
candidates, particular consideration is given to diversity in gender, age, nationality, educational and
professional background, as well as complementary skills, knowledge and experience. The profiles of
all supervisory board members are included in this report and available on www.glpg.com.
Gender:
Status:
4
men
4
women
5
independent
3
non-
independent
The supervisory board’s role is to pursue the long-term success of Galapagos. The board does
so by assuming the authority and responsibilities assigned to it by Belgian corporate law and
by combining entrepreneurial leadership with appropriate risk assessment and management.
Each of the supervisory board members’ expertise and experience is exemplified by the varied
professional activities they carry out and offices they hold. During its meetings in 2021, the
supervisory board dealt with matters pertaining to, among other things, our strategy and growth,
the new arrangement with Gilead for the commercialization and development of filgotinib,
the evaluation of other business development opportunities, the search and recruitment of a
suitable successor to lead our organization and a CSO, clinical trial results and shareholder
activism, convening of the shareholders’ meeting and preparation of resolutions to be submitted
for approval to the shareholders, and review and approval of our financial reporting.
In 2021, given the continuing COVID-19 pandemic and all related safety measures, the
supervisory board was unable to hold regular in person meetings, which were instead replaced
by digital meeting formats. Sixteen meetings took place by telephone conference or videocall
to discuss specific matters, including one meeting in the presence of a notary public (relating
to the issuance of Subscription Right Plan 2021 BE, Subscription Right Plan 2021 RMV and
Subscription Right Plan 2021 ROW). The meeting in the presence of a notary was attended by
Mr. Guenter and Dr. Svanberg via telephone conference; all other directors were represented
by proxy. The attendance rate for the other meetings, as identified in the table above, was as
follows: Dr. Parekh: 100%; Mr. Rowe: 93%; Ms. Bosley: 93%; Dr. Kerr: 100%; Mr. Guenter: 67%;
Mr. O’Day: 87%; Dr. Higgins: 93% and Dr. Svanberg: 100%. The overall attendance rate was 92%.
Mr. O’Day and Dr. Higgins recused themselves from one meeting because of a conflict of interest,
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in accordance with article 7:115, § 1, 4 of the Belgian Companies Code, as set forth in further
detail in the section titled Conflict of interests and related parties.
The supervisory board acts as a collegial body. A formal evaluation of the supervisory board
and its committees was carried out in September 2021. Each board member provided feedback
through individual assessment forms. The results were presented on an aggregate basis by
the secretary ad interim of the supervisory board and served as a basis for discussion by the
full supervisory board. This evaluation specifically addressed the functioning of the supervisory
board, the size and composition of the supervisory board, the interaction between the
supervisory board and the management board, and the functioning of the audit committee and
the nomination and remuneration committee.
The supervisory board has appointed a secretary entrusted with the functions set out in
Galapagos’ corporate governance charter.
Committees
Audit committee
Audit committee member
Howard Rowe
Mary Kerr
Peter Guenter
Function
Chairman
Member
Member
Independent
director(1)
Attendance rate
●
●
●
100%
100%
88%
(1) Independent director pursuant to article 7:106 juncto article 7:87 of the Belgian Companies Code and 2020 Code.
The role of the audit committee is to follow up on financial reporting and verification of financial
data, safeguard the integrity of our financial reporting, verify and follow up on the internal control
mechanisms, evaluate and verify the effectiveness of the risk assessment systems, follow up on
the internal and external audit activities, review, monitor and evaluate the independence and
performance of the external auditor and inform the supervisory board on the results of the
statutory audit. The audit committee also reviews corporate social responsibility initiatives, as
included in the CSR-report, which contains the non-financial information as required by articles
3:6 § 4 and 3:32 § 2 of the Belgian Companies Code.
At the end of 2021, the audit committee consisted of the following three supervisory board
members, as identified in the table above: Mr. Rowe (chairman), Dr. Kerr and Mr. Guenter. All
members of the audit committee are non-executive directors, the majority of whom are
independent within the meaning of article 7:106 juncto article 7:87 of the Belgian Companies
Code and provision 3.5 of the 2020 Code. The chairman is an independent non-executive
director. All members of the audit committee have extensive experience in the life sciences
industry. Mr. Rowe has relevant expertise in financial matters (including general accounting and
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financial reporting) and in matters of audit, internal control and risk control. The other members
have extensive experience in these matters as well.
In 2021, the audit committee held eight meetings,
in which it dealt with matters pertaining
to, among other things, audit review, risk management, monitoring financial reporting, the
monitoring of Sarbanes-Oxley compliant internal and external audit systems and assessing the
need to have a formal internal audit function. The audit committee acts as a collegial body. The
overall attendance at the audit committee meetings in 2021 was 96%. The attendance rate at the
audit committee meetings in 2021 for each of its members is set forth in the table above. Some
of the meetings were attended by the statutory auditor.
Nomination and remuneration committee
Nomination and remuneration committee
member
Rajesh Parekh
Katrine Bosley
Elisabeth Svanberg
Function
Chairman
Member
Member
Independent
director(1)
Attendance rate
●
●
100%
86%
100%
(1) Independent director pursuant to article 7:106 juncto article 7:87 of the Belgian Companies Code and 2020 Code.
The nomination and remuneration committee’s role is twofold: providing recommendations to
the supervisory board regarding the remuneration policy of Galapagos and the remuneration of
supervisory board members and management board members, and selecting the appropriate
candidates and making recommendations to the supervisory board in relation to the
appointment of supervisory board members and management board members, including our
new CEO.
At the end of 2021, the nomination and remuneration committee consisted of the following
three non-executive directors, as identified in the table above: Dr. Parekh (chairman), Ms. Bosley
and Dr. Svanberg, the majority of whom are independent supervisory board members within the
meaning of article 7:106 juncto article 7:87 of the Belgian Companies Code and provision 3.5 of
the 2020 Code. The committee has the necessary expertise in the area of remuneration policy.
The nomination and remuneration committee meets at least twice per year.
In 2021, the
nomination and remuneration committee held seven meetings, dealing with, among other things,
matters pertaining to grants of subscription rights, RSUs and bonuses, the nomination and
remuneration of management board members, including the severance package of our former
CSO and the retirement package of our retiring CEO, salary increases and shareholder activism.
The nomination and remuneration committee acts as a collegial body. The overall attendance
at the nomination and remuneration committee meetings in 2021 was 93%. The attendance
rate at the nomination and remuneration committee meetings in 2021 for each of its members
is set forth in the table above. The CEO attended the meetings of this committee when the
remuneration of the other members of the management board was discussed.
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Management board of Galapagos NV
Composition of the management board
Per 31 December 2021, our management board consists of the following members:
Onno van de Stolpe founded our company in 1999 and
has served as our Chief Executive Officer. On 30 August
2021, Galapagos announced his planned retirement as
CEO and Dr. Paul Stoffels1 will fully take over as CEO
effective 1 April 2022. Until 31 October 2022, Onno van
de Stolpe will execute a purely advisory role as advisor
of the management board. Onno van de Stolpe was a
member of our board of directors from 1999 to 2020.
From 1998 to 1999, he was the Managing Director of
Genomics at IntroGene BV (later Crucell NV, which was
acquired by Johnson & Johnson Services, Inc. in 2011).
Prior to joining IntroGene in 1998, he was Managing
Director of Molecular Probes Europe BV. He established
the European headquarters after joining Molecular
Probes, Inc. in the United States. Previously, he worked
for The Netherlands Foreign Investment Agency in
California, where he was responsible for recruiting biotechnology and medical device companies
to locate in the Netherlands. Mr. Van de Stolpe started his career as Manager of Business
Development at MOGEN International NV in Leiden. He received an MSc degree from
Wageningen University. Mr. Van de Stolpe has previously served as a member of the board of
directors of DCPrime BV and as a member of the supervisory board of the Stichting Institute for
Human Organ and Disease Model Technologies. In September 2020, he was elected as non-
executive member of the supervisory board of Leyden Labs and since March 2021 he is a non-
executive member of the board of directors of European Biotech Acquisition Corp (EBAC).
1
Acting via Stoffels IMC BV.
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Bart Filius, MBA was appointed President of Galapagos
in February 2021 and has served as our Chief Financial
Officer since December 2014 and as our Chief
Operating Officer since September 2017. Prior to that,
Mr. Filius worked over 13 years at Sanofi SA, where he
was the Chief Financial Officer of Sanofi Europe during
the last three years. Earlier at Sanofi, he was the Country
Manager and Chief Financial Officer of Sanofi in the
Netherlands. Before that, he was Vice President for
Mergers & Acquisitions, during which time he led and
completed the divestiture of various franchises. Prior to
joining Sanofi, he was a strategy consultant at Arthur D.
Little. Mr. Filius has an MBA degree from INSEAD and a
bachelor’s degree in business from Nyenrode Business
University. In May 2019, Mr. Filius was elected as non-
executive director in the supervisory board of ProQR
Therapeutics NV.
Andre Hoekema, Ph.D.
is responsible for M&A,
licensing and Intellectual Property at Galapagos as our
Chief Business Officer. He joined Galapagos in March
2005 from Invitrogen Corporation, where he was
Managing Director of Corporate Development Europe.
He brings 20 years of biotech experience from positions
at Molecular Probes Europe BV (Managing Director),
Crucell NV (Director of Business Development), DSM Life
Sciences NV and Syngenta MOGEN BV (Research and
Project Management) and Genentech,
(R&D).
Dr. Hoekema has a Ph.D. degree from Leiden University
and is the inventor of over 20 series of patent
applications, resulting in 15 patents issued in the United
States. Dr. Hoekema currently also serves as a member
of
the supervisory board of Mimetas BV and has
previously served as a member of the supervisory board
of VitalNext BV.
Inc.
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Walid Abi-Saab, MD joined Galapagos as Chief Medical
Officer in March 2017. Dr. Abi-Saab drives Galapagos’
overall medical strategy and is responsible for late stage
clinical development and operations, medical and
June 2021, he
regulatory affairs, and safety. As of
became responsible for all development activities as he
added early-stage development activities to his already
existing responsibilities for late-stage development. As
of December 2021, Dr. Abi-Saab took on ad interim
responsibility for the Research Organization. Before,
Dr. Abi-Saab worked at Shire AG where he held various
clinical development leadership roles, most recently as
Group Vice President, Global Clinical Development –
Therapeutic Area Head, Gastro-intestinal, Endocrinology
and Metabolism. Prior
to that, he led clinical
development activities at Novartis Pharma AG, Abbott
Laboratories Inc. and Pfizer Inc., addressing a wide range of therapeutic areas and leading teams
throughout the clinical development process. Under his leadership, more than 30 molecules
have advanced through clinical development leading to several approvals in the United States,
the EU and Canada. Prior to his pharma roles, Dr. Abi-Saab was Assistant Professor of Psychiatry
and Neurosurgery at Yale University Medical School, where he headed their Schizophrenia
Research at the Clinical Neuroscience Research Unit and the Neurosurgery Epilepsy Microdialysis
Research Program. Dr. Abi-Saab holds an MD degree from Université Saint Joseph in Beirut,
Lebanon.
Michele Manto, MBA was appointed Chief Commercial
Officer
in January 2020. He joined Galapagos in
September 2017 as Senior Vice President Commercial
Operations to build and lead Galapagos’ commercial
organization and capabilities. Previously, Mr. Manto
held various commercial
leadership roles at AbbVie,
most recently as General Manager, Global Marketing
Rheumatology and as General Manager
in the
Netherlands. Prior to this, he led AbbVie’s commercial
activities
rheumatology,
gastroenterology and dermatology in Germany and
other European countries. He started his professional
career as a management and strategy consultant at
McKinsey & Company. Mr. Manto holds an MBA from
INSEAD and a degree in engineering from the
Politecnico of Milan.
launches
and
in
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Our new Chief Executive Officer
Stoffels IMC BV, permanently represented by Dr. Paul
Stoffels, was appointed as our Chief Executive Officer
effective 1 April 2022.
Paul Stoffels2, MD has studied Medicine at
the
University of Diepenbeek and the University of Antwerp
(both in Belgium) and Infectious Diseases and Tropical
Medicine at the Institute of Tropical Medicine in Antwerp
(Belgium). Until 2021, Dr. Stoffels was Vice Chairman of
the Executive Committee and Chief Scientific Officer of
setting the company wide
Johnson & Johnson,
innovation agenda, leading the pharmaceutical research
and product pipeline as well as the external innovation
initiatives. Prior to that, he was worldwide Chairman
Johnson & Johnson, which
Pharmaceuticals
rejuvenated its product pipeline and
significantly
adopted a transformational R&D operating model, resulting in the launch of 25 innovative
medicines across the globe. Dr. Stoffels joined Johnson & Johnson in 2002, with the acquisition of
Virco and Tibotec, where he was CEO, respectively Chairman, and led the development of several
breakthrough products for the treatment of HIV. Dr. Stoffels currently serves as member of the
supervisory board of Koninklijke Philips NV. Dr. Stoffels was already a member of the board of
directors of Galapagos NV from its incorporation until 2002.
of
2
Acting via Stoffels IMC BV.
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About the management board
Management board
member
Position
Nationality Year of birth
appointment
Year of
Onno van de Stolpe
Chief Executive Officer
Dutch
1959
1999
President,
Chief Financial Officer &
Bart Filius
Chief Operating Officer
Dutch
Andre Hoekema
Chief Business Officer
Dutch
Piet Wigerinck(1)
Chief Scientific Officer
Belgian
Walid Abi-Saab
Chief Medical Officer
Lebanese
Michele Manto
Chief Commercial Officer
Italian
U.S. &
(1) Management board member until 30 November 2021.
1970
1957
1964
1965
1973
2014
2005
2012
2017
2020
The tasks of the management board include the following matters: the research, identification
and development of strategic possibilities and proposals which may contribute to our
development in general, management of the group, the supervision of the actual performance of
the business compared to its strategic goals, plans and budgets, and the support of the CEO with
the day-to-day management of Galapagos.
The management board meets regularly, and in principle once per month.
On 31 December 2021, the management board consisted of five people: Mr. Van de Stolpe (CEO
and chairman of the management board), Mr. Filius (President, CFO and COO), Dr. Hoekema
(CBO), Dr. Abi-Saab (CMO) and Mr. Manto (CCO), representing four different nationalities and
different age categories. Dr. Wigerinck’s mandate as Chief Scientific Officer and management
board member ended per 30 November 2021.
Furthermore, the management board members have different educational backgrounds, as can
be read in each of their profiles (above).
In proposing candidates for the management board, particular consideration is given to
educational and professional background, complementary skills, knowledge and experience, as
well as to diversity in age, gender and nationality.
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Galapagos NV’s share capital and shares
Share capital increases and issue of shares by
Galapagos NV in 2021
On 1 January 2021, the share capital of Galapagos NV amounted to €353,819,443.97 represented
by 65,411,767 shares. In the course of 2021 there were four capital increases resulting from the
exercise of subscription rights under employee subscription right plans, resulting in the issuance
of 140,954 new shares, an increase of the share capital by €762,561.14 and an increase of the
issuance premium account by €2,551,248.18.
At the end of 2021, the share capital of Galapagos NV amounted to €354,582,005.11 represented
by 65,552,721 shares.
On 30 April 2021, the supervisory board issued 2,493,433 subscription rights (after acceptance
by the beneficiaries) within the framework of the authorized capital, for the benefit of the
management board members and employees of the group under new subscription right plans
(“Subscription Right Plan 2021 BE”, “Subscription Right Plan 2021 RMV” and “Subscription Right
Plan 2021 ROW”).
The subscription rights issued under Subscription Right Plan 2021 BE, Subscription Right Plan
2021 RMV and Subscription Right Plan 2021 ROW have a term of eight years as of the date of the
offer and an exercise price of €64.76 (the closing price of the share on Euronext Amsterdam and
Brussels on the day preceding the date of the offer).
Number and form of Galapagos shares
Of the 65,552,721 shares of Galapagos NV outstanding at the end of 2021, 5,661 were registered
shares and 65,547,060 shares were dematerialized shares. All shares are issued and fully paid up
and are of the same class.
Rights attached to Galapagos shares
Each share (i) entitles its holder to one vote at the shareholders’ meetings; (ii) represents an
identical fraction of the share capital and has the same rights and obligations and shares
equally in the profit of Galapagos NV; and (iii) gives its holder a preferential subscription right
to subscribe to new shares, convertible bonds or subscription rights in proportion to the part
of the share capital represented by the shares already held. The preferential subscription right
can be restricted or cancelled by a resolution approved by the shareholders’ meeting, or by the
supervisory board subject to an authorization of the shareholders’ meeting, in accordance with
the provisions of the Belgian Companies Code and Galapagos NV’s articles of association.
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Galapagos NV’s authorized capital
In accordance with the articles of association, the extraordinary shareholders’ meeting of
Galapagos NV authorized the supervisory board to increase the share capital of Galapagos NV,
in one or several times, and under certain conditions set forth in extenso in the articles of
association of Galapagos NV.
This authorization consists of two parts. A general authorization for capital increases up to 20%
of the share capital at the time of convening the shareholders’ meeting of 22 October 2019 (i.e.
€67,022,402.04) was renewed and is valid for a period of five years from the date of publication
of this renewal in the Annexes to the Belgian State Gazette, i.e. 13 November 2019. A specific
authorization for capital increases of more than 20% and up to 33% of the share capital at
the time of the convening the shareholders’ meeting of 25 April 2017 (i.e. € 82,561,764.93), was
renewed and is valid for a period of five years from the date of publication of this renewal in the
Annexes to the Belgian State Gazette, i.e. 31 May 2017. This specific part of the authorized capital
can, however, only be used in a number of specific circumstances and upon a resolution of the
supervisory board that all independent members of the supervisory board (within the meaning
of article 7:87 of the Belgian Companies Code) approve. This specific authorization will expire on
30 May 2022.
In 2021, Galapagos NV’s supervisory board made use of the right to increase the capital in the
framework of the authorized capital on one occasion: on 30 April 2021, in connection with the
issuance of Subscription Right Plan 2021 BE, Subscription Right Plan 2021 RMV and Subscription
Right Plan 2021 ROW, under which a maximum of 2,736,250 new shares could be issued for a
total maximum capital increase of €14,803,112.50 (plus issuance premium). On 31 December
2021, an amount of €41,775,187.16 still remained available under the general part of the
authorized capital and an amount of €13,717,929.80 remained available under the specific part
of the authorized capital.
When increasing the share capital within the limits of the authorized capital, the supervisory
board may,
the shareholders’ preferential
subscription rights, even if such restriction or cancellation is made for the benefit of one or more
specific persons other than the employees of the group.
in Galapagos NV’s interest, restrict or cancel
Procedure for changes in Galapagos NV’s share
capital
In accordance with the Belgian Companies Code, Galapagos NV may increase or decrease its
share capital by decision of the extraordinary shareholders’ meeting approved by a majority of
75% of the votes cast, at a meeting where at least 50% of the share capital of Galapagos NV
is present or represented. If the attendance quorum of 50% is not met, a new extraordinary
shareholders’ meeting must be convened at which the shareholders may decide on the agenda
items, irrespective of the percentage of share capital present or represented at such meeting. In
this respect, there are no conditions imposed by Galapagos NV’s articles of association that are
more stringent than those required by law.
Within the framework of the powers granted to it under the authorized capital, the supervisory
board may also increase Galapagos NV’s capital as specified in its articles of association.
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Purchase and sale of Galapagos treasury shares
In accordance with the Belgian Companies Code, Galapagos NV may purchase, subject to the
provisions of the Belgian Companies Code, Galapagos NV’s own shares and dispose thereof by
decision of the extraordinary shareholders’ meeting approved by a majority of 75% of the votes cast,
at a meeting where at least 50% of the share capital of Galapagos NV is present or represented. If the
attendance quorum of 50% is not met, a new extraordinary shareholders’ meeting must be convened
at which the shareholders may decide on the agenda items, irrespective of the percentage of share
capital present or represented at such meeting. The aforementioned rules are also applicable to the
acquisition of shares of Galapagos NV by its subsidiaries.
The supervisory board has currently not been authorized by an extraordinary shareholders’
meeting to purchase or sell its own shares.
On 31 December 2021, neither Galapagos NV nor any subsidiary of Galapagos NV held any
shares in Galapagos NV, nor did any third party hold any shares in Galapagos NV on behalf of
Galapagos NV or any of its subsidiaries either.
Anti-takeover provisions in Galapagos NV’s articles of
association
Galapagos NV’s articles of association currently do not contain any anti-takeover provisions.
Anti-takeover provisions under Belgian law
Under Belgian law, public takeover bids for all outstanding voting securities of the issuer are subject to
the supervision of the FSMA. If the latter determines that a takeover violates Belgian law, it may lead to
suspension of the exercise of the rights attached to any shares that were acquired in connection with
the envisaged takeover. Pursuant to the Belgian Law of 1 April 2007 on public takeovers, a mandatory
takeover bid must be made when, as a result of its own acquisition or the acquisition by persons acting
in concert with it, a person owns, directly or indirectly, more than 30% of the securities with voting rights
in a company with registered office in Belgium whose securities are admitted to trading on a regulated
or recognized market. The acquirer must offer to all other shareholders the opportunity to sell their
shares at the higher of (i) the highest price offered by the acquirer for shares of the issuer during the 12
months preceding the announcement of the bid or (ii) the weighted average price of the shares on the
most liquid market of the last 30 calendar days prior to the date on which it became mandatory for the
acquirer to launch a mandatory takeover bid for the shares of all other shareholders.
Material contracts containing change of control
clauses
The second amended and restated collaboration agreement between Galapagos NV and AbbVie
S.à r.l. (“AbbVie”) dated 24 October 2018 contains provisions granting certain rights to AbbVie
upon the occurrence of a public takeover bid on our shares or a change of control in respect
of Galapagos NV, including, but not limited to clause 11.2 (Change in Control of Galapagos),
entitling AbbVie, to oblige Galapagos NV to take appropriate measures to avoid the disclosure of
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confidential information, to limit AbbVie’s reporting obligations to Galapagos NV, or, depending
on the stage in which the change of control occurs, to terminate the agreement.
Procedure for amendments to Galapagos NV’s
articles of association
Pursuant to the Belgian Companies Code, any amendment to the articles of association, such as
an increase or decrease in the share capital of Galapagos NV, and certain other matters, such as
the approval of the dissolution, merger or de-merger of Galapagos NV may only be authorized
with the approval of at least 75% of the votes validly cast at an extraordinary shareholders’
meeting where at least 50% of Galapagos NV’s share capital is present or represented. If the
attendance quorum of 50% is not met, a new extraordinary shareholders’ meeting must be
convened at which the shareholders may decide on the agenda items,
irrespective of the
percentage of share capital present or represented at such meeting.
Shareholders
Major shareholders of Galapagos NV
Based on the transparency notifications received by Galapagos NV under Belgian law and the
statements of acquisition of beneficial ownership filed with the U.S. Securities and Exchange
Commission under U.S. securities law, the shareholders owning 5% or more of Galapagos NV’s
shares on 31 December 2021 were Gilead Therapeutics A1 Unlimited Company (16,707,477
shares or 25.49%), and Van Herk Investments B.V. (4,635,672 shares or 7.07%).
Major shareholders on 31 December 2021
66.65%
Other shareholders
25.49%
Gilead
7.07%
Van Herk Investments
0.79%
Insiders
At the end of 2021, our CEO owned 438,889 shares of Galapagos NV and 870,000 subscription
rights. The other members of our management board held an aggregate of 71,357 shares
and 1,095,000 subscription rights. The members of our supervisory board held an aggregate
of 10,001 shares and 157,560 subscription rights. Each subscription right entitles its holder to
subscribe to one share of Galapagos NV. Supervisory board members Daniel O’Day and Linda
Higgins are representatives of our major shareholder Gilead.
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Agreements between Galapagos NV shareholders
On the date of this report, Galapagos NV had no knowledge of the existence of any shareholders’
agreements between its shareholders.
Agreements with major Galapagos NV shareholders
On 14 July 2019, we and Gilead announced that we entered into a 10-year global research
and development collaboration. In the context of the transaction, Gilead also made an equity
investment in Galapagos. We also amended and restated the license agreement for filgotinib that
we originally entered into with Gilead on 16 December 2015. On 23 August 2019, the closing of
the transaction took place and we received an upfront payment of €3,569.8 million ($3.95 billion)
and a €960.1 million ($1.1 billion) equity investment from Gilead.
On 15 December 2020, we and Gilead announced that we agreed to amend our existing
arrangement for the commercialization and development of filgotinib again.
Terms of the equity investment
As part of the research and development collaboration, Gilead entered into a share subscription
agreement with us. On 23 August 2019, Gilead Therapeutics A1 Unlimited Company subscribed
to 6,828,985 new Galapagos shares at a price of €140.59 per share, including issuance premium.
Subject to the approval of Galapagos’ shareholders and certain other conditions, Gilead has the
right under the terms of the share subscription agreement to have two designees appointed
to our board of directors. The special shareholders’ meeting of 22 October 2019 approved the
appointment of Daniel O’Day and Linda Higgins as directors of Galapagos NV.
On 22 October 2019, our extraordinary shareholders’ meeting further issued a warrant to Gilead
Therapeutics A1 Unlimited Company, known as warrant A, that confers the right to subscribe
for a number of new shares sufficient to bring the number of shares owned by Gilead and its
affiliates to 25.1% of the issued and outstanding shares. Warrant A expires one year after the
issue date and the exercise price per share is €140.59. On 6 November 2019, Gilead exercised
warrant A and increased its ownership in Galapagos to 25.10% of the then outstanding shares.
Warrant A expired on 22 October 2020.
On 22 October 2019, Gilead Therapeutics A1 Unlimited Company was also issued another
warrant, known as the initial warrant B, that confers the right to subscribe for a number of new
shares sufficient to bring the number of shares owned by Gilead and its affiliates to 29.9% of the
issued and outstanding shares. The warrant will expire on 23 August 2024. The exercise price per
share will be the greater of (i) 120% multiplied by the arithmetic mean of the 30-day daily volume
weighted average trading price of the Galapagos shares preceding the date of the exercise notice
with respect to such exercise, and (ii) €140.59. Between 57 and 59 months of 23 August 2019,
subject to and upon approval by the shareholders’ meeting, Gilead Therapeutics A1 Unlimited
Company will be issued a warrant with substantially similar terms, including as to exercise price,
to the initial warrant B. This subsequent warrant B will expire on the earlier of the date that is five
years after the fifth anniversary of the closing and the date that the warrant is issued.
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to certain standstill
Gilead and Gilead Therapeutics A1 Unlimited Company are subject
restrictions until the date that is 10 years following the closing (23 August 2019). Among other
things, during this time Gilead and its affiliates and any party acting in concert with them may
not, without our consent, acquire voting securities of Galapagos exceeding more than 29.9%
of the then issued and outstanding voting securities, and Gilead and Gilead Therapeutics A1
Unlimited Company may not propose a business combination with or acquisition of Galapagos.
The standstill restrictions are subject to certain exceptions as provided in the share subscription
agreement.
Pursuant to the terms of the share subscription agreement, Gilead and Gilead Therapeutics A1
Unlimited Company also agreed to certain lock-up provisions. They shall not, and shall cause their
affiliates not to, without our prior consent, dispose of any equity securities of Galapagos prior to
the second anniversary of the closing (23 August 2019). During the period running from the date
that is two years following the closing until the date that is five years following the closing, Gilead
and its affiliates shall not, without our prior consent, dispose of any equity securities of Galapagos
if after such disposal they would own less than 20.1% of the then issued and outstanding voting
securities of Galapagos. The lock-up restrictions are subject to certain exceptions as provided in
the share subscription agreement and may terminate upon certain events. In April 2021, Gilead
and Galapagos agreed to amend the share subscription agreement to extend the full lock-up of
all of Gilead’s securities of Galapagos to a period of five years until 22 August 2024.
Terms of the global research and development collaboration
We will fund and lead all discovery and development autonomously until the end of Phase 2.
After the completion of a qualifying Phase 2 study (or, in certain circumstances, the first Phase 3
study), Gilead will have the option to acquire a license to the compound outside Europe. If
the option is exercised, we and Gilead will co-develop the compound and share costs equally.
Gilead will maintain option rights to our programs through the 10-year term of the collaboration.
This term can be extended, at the discretion of Gilead, for up to an additional three years
thereafter for those programs, if any, that have entered clinical development prior to the end of
the collaboration term. On top, a final term extension can be granted in certain circumstances.
For all programs resulting from the collaboration (other than GLPG1972 and GLPG1690), Gilead
will make a $150 million opt-in payment per program and will owe no subsequent milestones.
We will receive tiered royalties ranging from 20 – 24% on net sales of all our products licensed by
Gilead in all countries outside Europe as part of the agreement. For GLPG1972, Gilead declined
to exercise its option under the collaboration agreement in November 2020. In February 2021,
the development of GLPG1690 (ziritaxestat) was discontinued.
Revised filgotinib collaboration
Under the terms of the new arrangement agreed in December 2020, we assumed all
development, manufacturing, commercialization and certain other rights for filgotinib in Europe.
Gilead retains commercial rights and remains marketing authorization holder for filgotinib
outside of Europe, including in Japan. The transfer was subject to applicable local legal, regulatory
and consultation requirements. Most activities transferred to Galapagos by 31 December 2021
and we intend to complete the transition by 31 December 2022. The new arrangement was
formalized in (1) the Transition and Amendment Agreement of 3 April 2021 pursuant to which
Gilead transitioned the exploitation of filgotinib in Europe to Galapagos by the end of 2021,
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(2) the DIVERSITY Letter Agreement of 6 September 2021 pursuant to which we and Gilead
agreed to transfer the sponsorship of and operational and financial responsibility for the ongoing
DIVERSITY study and its long-term extension study (LTE) study to Galapagos, and (3) the Second
Amended and Restated License and Collaboration Agreement of 24 December 2021, amending
and restating the existing collaboration agreement, with effect as of 1 January 2022. In March
2022, Gilead and Galapagos agreed to transfer the sponsorship of and the operational
responsibility for the MANTA study and its long-term extension to Galapagos.
Since 1 January 2021, we bear the future development costs for certain studies, in lieu of the
equal cost split contemplated by the previous agreement. These studies include the DARWIN3,
FINCH4, FILOSOPHY, and Phase 4 studies and registries in RA, MANTA and MANTA-RAy, the
PENGUIN1 and 2 and EQUATOR2 studies in PsA, the SEALION1 and 2 studies in AS, the
HUMBOLDT study in uveitis in addition to other clinical and non-clinical expenses supporting
these studies and support for any investigator sponsored trials in non-IBD conditions and
non-clinical costs on all current trials. The existing 50/50 global development cost sharing
arrangement will continue for the following studies: SELECTION and its long-term extension
study (LTE) in UC, DIVERSITY and its LTE, DIVERGENCE 1 and 2 and their LTEs and support for
Phase 4 studies and registries in Crohn’s disease, pediatric studies and their LTEs in RA, UC and
Crohn’s disease, and support for investigator sponsored trials in IBD. In September 2021, we and
Gilead agreed to transfer the sponsorship of the DIVERSITY study and its LTE study from Gilead
to Galapagos. The transfer is intended to be completed by 30 June 2022. From 1 April 2022,
Galapagos will also be solely responsible for all development costs for the DIVERSITY study and its
LTE study. In March 2022, we and Gilead agreed to transfer the sponsorship of the MANTA study
and its long-term extension from Gilead to Galapagos. The transfer is intended to be completed
by 31 December 2022.
All commercial economics on filgotinib in Europe will transfer to us as of 1 January 2022, subject
to payment of tiered royalties of 8 to 15 percent of net sales in Europe to Gilead, starting in
2024. If the European Medicines Agency grants regulatory approval of filgotinib for the treatment
of CD based on data from the DIVERSITY study, then royalties payable by Galapagos to Gilead
will be reduced by 30 percent across all filgotinib indications and will become 5.6 to 10.5
percent of net sales in Europe. In connection with the amendments to the existing arrangement
for the commercialization and development of filgotinib, Gilead has agreed to irrevocably pay
Galapagos €160 million, subject to certain adjustments for higher than budgeted development
costs. Gilead paid €35 million in January 2021 and an additional €75 million in April 2021 and
will pay €50 million in 2022. Furthermore, upon completion of the transfer of and operational
responsibility for the DIVERSITY study, Gilead will make a one-time payment of $15 million
to Galapagos in consideration for Galapagos assuming responsibility for the DIVERSITY study.
In addition, we will no longer be eligible to receive any future milestone payments relating
to filgotinib in Europe. However, we will remain eligible to receive tiered royalty percentages
ranging from 20% to 30% on Gilead’s global net sales of filgotinib outside of Europe and future
development and regulatory milestone-based payments of up to $295 million and sales-based
milestone payments of up to $600 million.
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Our remuneration policy
A revised remuneration policy will apply as from 1 January 2022, subject to its approval by the
shareholders' meeting to be held on 26 April 2022. Such document is available on our website.
Remuneration report
Introduction: remuneration report 2021
Galapagos’ remuneration policy
Galapagos’ remuneration policy was prepared in accordance with the Belgian Companies Code.
the 2020 annual
Galapagos’ shareholders approved the current remuneration policy at
shareholders’ meeting with 68.21% of shareholder votes. The policy became effective as of
1 January 2020 and applies for the reporting year beginning on 1 January 2021. In this report we
will look back at 2021.
Galapagos encourages an open and constructive dialogue with its investors to discuss its
approach to governance, including remuneration. The increased disclosure in the remuneration
report reflects the input received from Galapagos’ shareholders over the years as well as
developments in the legislative framework, including individual disclosures for each supervisory
and management board member.
The objective of our remuneration policy is to attract, motivate and retain the diverse qualified
and expert individuals who are key in order to achieving our strategic and operational objectives.
We further aim to be competitive in the labor market by benchmarking against relevant peer
groups, incentivizing performance at the highest possible level, allowing for differential rewards
according to individual performance, avoiding discrimination on any grounds other than
performance, and reinforcing an open, fair, consistent and equitable culture.
Following the introduction of a one-tier governance structure, consisting of a board of directors
and an executive committee, to be proposed to the extraordinary shareholders’ meeting to be
held on 26 April 2022, a revised remuneration policy reflecting such change will be submitted for
approval of the annual shareholders’ meeting to be held on 26 April 2022.
Peer group and benchmarking
for
Galapagos’ remuneration policy takes into account relevant benchmarks with appropriate peer
companies and,
the management board members, also the group’s performance
management system. For the most recent benchmarking exercise executed in 2018, our
nomination and remuneration committee worked with Willis Towers Watson as external advisor.
Willis Towers Watson also provided external support for the benefit of the nomination and
remuneration committee in 2020. The peer group taken into consideration consisted of publicly
listed, early-stage high value biotechnology companies with a comparable market capitalization
in the U.S. and biotechnology and pharmaceutical companies in Europe. This benchmarking
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exercise indicated that in the biotechnology/pharmaceutical subsector, the “transatlantic” gap is
higher than in broader general industry and in the wider health sciences sector. The observed
gap in market pay levels between regional peer groups was attributable to long-term incentives;
in Europe,
long-term incentives were materially smaller. Galapagos’ pay-mix for all executive
functions was broadly in line with market practice observed within the U.S. peer group, while
in comparison to the European peer group it was more leveraged toward long-term incentives.
These findings were in line with and reinforced remuneration committee priorities for executive
compensation. The committee found the U.S. benchmark to be more relevant than that of
Europe given the majority of our competitors are based in the U.S., we have a significant number
of U.S. based shareholders whose views on remuneration are based on U.S. practices, and the
overall relevance of the U.S. market to the pharmaceutical industry.
Remuneration of supervisory board members
Remuneration structure components
The remuneration of supervisory board members consists of (i) a fixed annual cash amount, and
(ii) an equity-based component. The remuneration of the supervisory board members does not
contain a variable component, and hence no performance criteria apply to their remuneration.
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In accordance with the remuneration policy and the decision of the annual shareholders’ meeting
of 28 April 2020, the remuneration of the supervisory board members for the exercise of
their mandate during the financial year ending 31 December 2021 consisted of the following
components:
Supervisory board
Nomination and
Cash
Equity-based
Audit committee
remuneration
Super-
remuneration
remuneration
committee
Cash
(gross amount)
Acquired
TOTAL
REMUNERATION
Chairman Member
granted to
acquire GLPG
shares(1)
Chairman Member Chairman Member
GLPG
shares(1)
visory
board
members
Dr.
Rajesh
Parekh
€100,000
€100,000
1026
€20,000
€220,000
Mr.
Howard
Rowe
Ms.
Katrine
Bosley(2)
Dr. Mary
Kerr
Mr. Peter
Guenter
Dr.
Elisabeth
Svanberg
Mr.
Daniel
O’Day(3)
Dr. Linda
Higgins(3)
€50,000
€50,000
512
€20,000
€120,000
€50,000
€-
-
€15,000
€65,000
€50,000
€50,000
512
€15,000
€50,000
€50,000
522
€15,000
€115,000
€115,000
€50,000
€50,000
522
€15,000
€115,000
N/A(3)
N/A(3)
(1) The company grants a gross amount equal to the respective supervisory board member’s annual cash remuneration, to use
the net portion (after taxes) to acquire shares of Galapagos in the open market.
(2) Ms. Bosley waived her equity-related remuneration for financial year 2021.
(3) Mr. O’Day and Dr. Higgins, both Gilead representatives, do not receive any remuneration for their mandate as supervisory
board members.
Cash remuneration
The supervisory board members receive a fixed annual cash amount, irrespective of the number
of board meetings that are held during the year. These board fees are paid in quarterly
installments at the end of each calendar quarter.
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For the financial year 2021 the chairman of the supervisory board received cash remuneration of
€100,000 and the other members €50,000 each. In addition, committee membership entitles the
supervisory board members to an additional €15,000 in cash and committee chairmanship to an
additional €20,000 in cash.
Equity based remuneration
In accordance with provision 7.6 of the 2020 Code, Galapagos also grants supervisory board
members an equivalent to remuneration in shares. During the financial year 2021, the
supervisory board members received the following additional cash compensation: for the
chairman of the supervisory board €100,000 and for the other members €50,000 each, in each
case subject to the requirement to use the net amount (after taxes) to acquire Galapagos shares.
One supervisory board member waived the equity-based remuneration for the financial year
2021. These share purchases took place on 15 December 2021 and resulted in the number of
shares identified in the table above. The shares that each supervisory board member so acquires
are to be held until at least one year after the supervisory board member leaves the supervisory
board and at least three years after the time of acquisition. These latter payments make up
the equivalent of an equity component of the supervisory board members’ remuneration, as
recommended by the 2020 Code.
As of 2020 Galapagos does not grant any subscription rights to supervisory board members
(non-executive directors).
Remuneration of management board members
Remuneration structure components
The remuneration of management board members consists of (i) fixed remuneration consisting
of base salary, pension and other benefits and (ii) variable remuneration consisting of a cash
bonus and the grant of restricted stock units (“RSUs”) and subscription rights (“SRs”). For the
variable part of the management board members’ remuneration, performance criteria apply.
Performance criteria and evaluation methods for
management board members
For 2021, the performance criteria considered in decision-making for cash bonuses and annual
RSU grants include the elements identified in the table below, whereby each of the corporate
objectives is further detailed in a clear and measurable way to enable robust evaluation by
the nomination and remuneration committee as well as the supervisory board. Our ambition
is to establish ourselves as a successful commercial stage biopharmaceutical company focused
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on the discovery, development and commercialization of novel medicines in areas of unmet
medical needs to improve the lives of people suffering from serious diseases.
In order to
achieve this long-term goal, we want to keep innovation in our research efforts while making
sound clinical progress year over year and maintaining a healthy cash position. In addition, our
corporate development and business goals aim to foster the growth of the company and the
creation of value for all shareholders, including via business development opportunities in our
core therapeutic areas. Finally, our commercial development goal is intended to continue to
build our filgotinib franchise throughout Europe, remain on track to complete the transition
of the full European commercial operations for filgotinib from Gilead to us and becoming a
commercially successful biopharmaceutical company which brings novel medicines to market
(subject to having obtained governmental approvals).
2021 CORPORATE OBJECTIVES
Each equally weighted
Cash position
Actual cash burn versus guidance
Corporate and business development
Numbers of targets identified and pre-clinical candidates nominated
Research progress
Target number of clinical trials initiated and completed, regulatory approvals
Clinical trial progress
Commercial development
Filgotinib commercialization plan, including sales target
In terms of the individual performance evaluation, this is supported by the group’s performance
management system that assesses the performance of all employees (including management
board members) over the calendar year against a set of objectives determined at the start of the
year.
Finally, Galapagos’ policy is to grant a number of subscription rights each year based on a
consideration of each management board member’s role,
individual performance for the
performance year as well as individual impact on long-term value creation.
The nomination and remuneration committee is responsible for evaluating the management
board members’ performance in accordance with the principles set out above. The nomination
and remuneration committee is composed exclusively of non-executive directors and a majority
of its members qualify as independent supervisory board members. This helps prevent the
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Galapagos NV Annual Report 2021
Management
board
member
Onno van de
Stolpe(5)
CORPORATE GOVERNANCE
occurrence of conflicts of interest regarding the implementation of the remuneration policy in
relation to the management board members. The management board members are not invited
to take part in any discussions of the nomination and remuneration committee related to their
own individual remuneration.
Total remuneration
Fixed remuneration
Variable remuneration
Base salary
Other
components(1)
Pension
One-year
variable(2)
Multi-year variable
TOTAL
Vested
RSUs(3)
Granted
SRs(4)
REMUNERATION
Proportion of fixed
and variable
remuneration
€636,000
€164,314
€93,600
€360,000 €1,074,336
Bart Filius
€480,500
€27,565
€63,300
€215,906
€867,162
Andre
Hoekema
€377,250
€29,572
€55,350
€92,531
€383,622
Piet
Wigerinck(6)
Walid
Abi-Saab
Michele
Manto(7)
€387,333
€14,994
€57,200
€194,792
€713,686
€422,750
€15,874
€62,400
€154,219
€713,686
€336,250
€218,835
€48,750
€154,219
€173,444
€-
€-
€-
€-
€-
€-
Fixed: 38.39%
€2,328,250
Variable: 61.61%
Fixed: 34.54%
€1,654,433
Variable: 65.46%
Fixed: 49.26%
€938,325
Variable: 50.74%
Fixed: 33.59%
€1,368,005
Variable: 66.41%
Fixed: 36.60%
€1,368,929
Variable: 63.40%
Fixed: 64.82%
€931,498
Variable: 35.18%
(1) Other components are the value of the benefits and perquisites awarded, such as a company car, tax advisory services, health and disablity insurance
and work from home allowance.
(2) The one-year variable is the short-term bonus awarded to each management board member in respect of 2021 and paid in April 2022, except for Piet
Wigerinck the 2021 bonus (pro rata) has been paid in December 2021 following his departure.
(3) During financial year 2021 RSUs vested under RSU Plan 2019.II, 2019.III and 2020.II and pay-outs occurred accordingly.
(4) The value of the subscription rights ("SRs") granted during the financial year 2021 is calculated by comparing the exercise price with the average share
price of the share as quoted on Euronext Brussels and Amsterdam during the financial year 2021.
(5) Mr. Onno van de Stolpe's base salary is €636,000, including €18,859.44 in the form of personal pension contributions. The €93,600 pension amount
does not include the amount of €18,859.44, which is part of Mr. Onno van de Stolpe's fixed base salary. The 'Other components' figure principally
includes tax advisory fees.
(6) Management board member until 30 November 2021. His exit package is set out under section 'Severance clauses and payments'.
(7) Mr. Manto’s other components figure includes one-time compensation in relation to an adverse change in personal taxation basis. This change was
brought about by Galapagos’ decision for Mr Manto’s services to be provided under a management agreement with Galapagos from 1 January 2020, in
compliance with newly introduced Belgian Code and the introduction of the two-tier governance model and his appointment as mamagement board
member.
Fixed remuneration
The supervisory board, for the CEO upon recommendation of the nomination and remuneration
committee and for the other management board members upon proposals of the CEO, decided
that for the financial year 2021 each management board member received the base salary (gross
amount) as identified in the total remuneration table above. The fixed remuneration is a base
salary designed to fit responsibilities, relevant experience and competences, in line with market
rates for equivalent positions.
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Variable remuneration
Galapagos’ policy is to grant a number of
long-term incentives based on the individual
performance for the performance year while also considering individual impact on long-term
value creation. Bonuses consist both of a short-term cash component and a long-term RSU
component. Management board members were also offered subscription rights in 2021.
Under our remuneration policy, the CEO’s cash bonus can be maximum 75% of base salary. The
aggregate cash bonuses of the other members of the management board can be maximum 50%
of the aggregate base salaries. An equivalent number of RSUs will be granted to the CEO and the
other members of the management board under the RSU Annual Long-Term Incentive Plan.
(a) Short-term variable remuneration
The supervisory board determined an overall achievement of 75% (out of a maximum of 100%)
against the 2021 corporate objectives. In arriving at this determination, the supervisory board
considered that some of the objectives were not achieved, some had been achieved and some
overachieved. Highlights over 2021 included commercialization efforts to deliver Galapagos’ first
medicine to patients, the refocusing of our pipeline and rightsizing of our operations, and strong
financial discipline and operational excellence ensuring a long-term sustainable business.
The 75% corporate funding level is applicable to the wider Galapagos workforce for the corporate
component of their bonus funding, including the management board members. The supervisory
board, for the CEO upon recommendation of the nomination and remuneration committee and
for the other management board members upon proposals of the CEO, considered this level of
funding, as applied to the wider workforce, together with individual performance of management
board members in order to determine the individual cash bonus outcomes for 2021 set out in
the total remuneration table above: Mr. Onno van de Stolpe (€360,000; 56.63% of 2021 base
salary), Mr. Bart Filius (€215,906; 43.18% of 2021 base salary), Dr. Andre Hoekema (€92,531;
24.35% of 2021 base salary), Dr. Walid Abi-Saab (€154,219; 36.29% of 2021 base salary) and
Mr. Michele Manto (€154,219; 45.36% of 2021 base salary). These 2021 cash bonuses will be
paid in April 2022. With the exception of the retiring CEO, each of the management board
members will be granted an equivalent number of RSUs under the 2022 RSU Annual Long-Term
Incentive Plan as long-term variable remuneration. Galapagos applied a maximum corporate
funding (100%) for the determination of Dr. Wigerinck's bonus and Dr. Wigerinck received a pro
rata maximum cash bonus for 2021 (€194,792; 45.83% of 2021 base salary). His bonus has been
paid out in December 2021 and he will not be entitled to any subsequent RSU grant.
(b) Long-term variable remuneration
In 2021 the management board members were offered new subscription rights under
Subscription Right Plan 2021 BE and each accepted all subscription rights granted as per the
following: Mr. Onno van de Stolpe: 85,000 subscription rights, Mr. Bart Filius: 50,000 subscription
rights, each of Dr. Piet Wigerinck and Dr. Walid Abi-Saab: 40,000 subscription rights and each
of Dr. Andre Hoekema and Mr. Michele Manto: 30,000 subscription rights. Further reference is
made to the Equity components of the remuneration section, which contains, among others, a
description of the 2021 grant of subscription rights.
The total remuneration table above sets forth the value of the number of RSUs vested and
paid out in 2021 for each management board member. Each RSU represents the right to
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CORPORATE GOVERNANCE
receive, at Galapagos’ discretion, one Galapagos share or a payment in cash of an amount
equivalent to the volume-weighted average price of the Galapagos share on Euronext Brussels
over the 30-calendar day period preceding the relevant vesting date. During 2021, there were
RSU vestings under three different RSU plans: Plan 2019.II, Plan 2019.III and Plan 2020.II. The pay-
outs to the management board members occurred accordingly and the aggregate amounts are
set forth in the total remuneration table above. Reference is made to the Equity components of
the remuneration section.
For a description of the RSU grants to the management board members in 2021, reference is
made to the Equity components of the remuneration section. This section also sets out the
main characteristics of the different RSU plans issued by Galapagos to its management board
members in 2019, 2020 and 2021.
The 50% deferred part of the bonus awarded and relating to the financial year 2018 was entirely
forfeited and not paid out in 2021 as a result of the share performance of Galapagos NV’s share
over the period 2018 – 2021 relative to the Next Biotech Index (which tracks Euronext-listed
biotech companies) as per the provisions of the Senior Management Bonus Scheme.
Pension and other components
insurance programs (covering life insurance, disability, travel
In addition, the management board members enjoy a number of benefits such as a retirement
plan,
insurance and health),
company cars and the provision of tax advisory services. The aforementioned retirement plan is
set up as a defined contribution arrangement and is in line with market practice in Belgium. The
pension and other components of the remuneration of each management board member are
summarized in the total remuneration table above.
Equity components of the remuneration
Subscription rights awarded, exercised or expired
In 2021, we issued three subscription right plans for the benefit of employees of the group
and of management board members: Subscription Right Plan 2021 BE, Subscription Right Plan
2021 RMV and Subscription Right Plan 2021 ROW. The management board members were
offered new subscription rights under Subscription Right Plan 2021 BE, subject to acceptance.
Subscription rights is the new term for instruments formerly referred to as “warrants” under
the new Belgian Companies Code. The final number of accepted subscription rights under
Subscription Right Plan 2021 BE was enacted by notary deeds of 2 July 2021 and 18 August 2021.
The table below sets forth the numbers of subscription rights offered and accepted by each
management board member in 2021 under Subscription Right Plan 2021 BE.
The main characteristics of the subscription right plans offered to the management board
members are as follows:
The subscription rights are offered for no consideration;
The subscription rights typically have a lifetime of eight years and a vesting period of three
years after the year of grant;
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Good and bad leaver rules apply in case of termination prior to the end of the vesting period;
and
The subscription rights are not transferable.
Under Subscription Right Plan 2021 BE, the subscription rights have a lifetime of eight years
and an exercise price of €64.76. Each subscription right gives the right to subscribe for one
new Galapagos share. For all the beneficiaries under the Subscription Right Plan 2021 BE, the
subscription rights vest only and fully on the first day of the fourth calendar year following
the calendar year in which the grant was made. The subscription rights can in principle not
be exercised prior to 1 January 2025. The table below sets forth the main characteristics for
subscription right plans issued during previous years.
As from 1 January 2020, Galapagos no longer grants any subscription rights to supervisory board
members, taking into account the stricter rules of the Belgian Companies Code and provision 7.6
of the 2020 Code, which stipulates that non-executive directors should not be entitled to receive
stock options. Prior to 2020, supervisory board members were granted subscription rights and
hence the table below also contains disclosures for supervisory board members.
No subscription rights expired for management board or supervisory board members in 2021.
The table below sets forth the subscription rights outstanding and exercisable per
31 December 2021 for
the
subscription rights awarded to the management board members during 2021 and exercised by
the management board or supervisory board members in 2021, including for our former CSO
Dr. Wigerinck:
the management board and supervisory board members,
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
Supervisory board members
36 months
1/36 per
01/01/2021 –
WP 2017 30/08/2017
month
16/05/2025
€ 80.57
15,000
15,000
Dr. Rasjesh
Parekh
36 months
1/36 per
01/01/2022 –
WP 2018 24/08/2018
month
18/04/2026
€ 79.88
15,000
36 months
1/36 per
01/01/2023 –
WP 2019 12/07/2019
month
10/04/2027
€ 95.11
15,000
0
0
0
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Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
36 months
1/36 per
01/01/2018 –
WP 2014 25/07/2014
month
24/07/2022
€ 14.54
2,520
2,520
36 months
1/36 per
01/01/2019 –
WP 2015 30/04/2015
month
29/04/2023
€ 28.75
2,520
2,520
36 months
1/36 per
02/03/2019 –
WP 2015.B 02/03/2016
month
21/12/2023
€ 49.00
7,500
7,500
Mr. Howard
Rowe
36 months
1/36 per
01/01/2020 –
WP 2016 16/08/2016
month
31/05/2024
€ 46.10
7,500
7,500
36 months
1/36 per
01/01/2021 –
WP 2017 30/08/2017
month
16/05/2025
€ 80.57
7,500
7,500
36 months
1/36 per
01/01/2022 –
WP 2018 24/08/2018
month
18/04/2026
€ 79.88
7,500
36 months
1/36 per
01/01/2023 –
WP 2019 12/07/2019
month
10/04/2027
€ 95.11
7,500
36 months
1/36 per
01/01/2019 –
WP 2015 30/04/2015
month
29/04/2023
€ 28.75
2,520
2,520
36 months
1/36 per
02/03/2019 –
WP 2015.B 02/03/2016
month
21/12/2023
€ 49.00
7,500
7,500
36 months
1/36 per
01/01/2020 –
WP 2016 16/08/2016
month
31/05/2024
€ 46.10
7,500
7,500
36 months
1/36 per
01/01/2021 –
WP 2017 30/08/2017
month
16/05/2025
€ 80.57
7,500
7,500
36 months
1/36 per
01/01/2022 –
WP 2018 24/08/2018
month
18/04/2026
€ 79.88
7,500
36 months
1/36 per
01/01/2023 –
WP 2019 12/07/2019
month
10/04/2027
€ 95.11
7,500
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Galapagos NV Annual Report 2021
Ms. Katrine
Bosley
0
0
0
0
0
0
0
0
0
0
0
0
0
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
36 months
1/36 per
01/01/2021 –
WP 2017 30/08/2017
month
16/05/2025
€ 80.57
7,500
7,500
Dr. Mary Kerr
1/36 per
01/01/2022 –
WP 2018 24/08/2018
month
18/04/2026
€ 79.88
7,500
36 months
36 months
1/36 per
01/01/2023 –
WP 2019 12/07/2019
month
10/04/2027
€ 95.11
7,500
36 months
1/36 per
01/01/2023 –
WP 2019 12/07/2019
month
10/04/2027
€ 95.11
7,500
0
0
0
0
Mr. Peter
Guenter
Dr. Elisabeth
Svanberg
Dr. Linda
Higgins
Mr. Daniel
O'Day
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
143
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
Management board members
36 months
1/36 per
01/01/2017 –
WP 2013 29/07/2013
month
15/05/2021
€ 19.38
0
0
41,874
36 months
1/36 per
01/01/2018 –
WP 2014 14/10/2014
month
24/07/2022
€ 14.54
100,000
100,000
36 months
1/36 per
01/01/2019 –
WP 2015 29/06/2015
month
29/04/2023
€ 28.75
100,000
100,000
36 months
1/36 per
02/03/2019 –
WP 2015.B 02/03/2016
month
21/12/2023
€ 49.00
100,000
100,000
36 months
1/36 per
01/01/2020 –
WP 2016 31/07/2016
month
31/05/2024
€ 46.10
100,000
100,000
Mr. Onno van
de Stolpe
36 months
1/36 per
01/01/2021 –
WP 2017 30/08/2017
month
16/05/2025
€ 80.57
100,000
100,000
36 months
1/36 per
01/01/2022 –
WP 2018 18/06/2018
month
18/04/2026
€ 79.88
100,000
36 months
1/36 per
01/01/2023 –
WP 2019 12/07/2019
month
10/04/2027
€ 95.11
100,000
100% 3rd year
after year of
SR Plan
grant
01/01/2024 –
2020 16/06/2020
01/01/2024
17/04/2028 € 168.42
85,000
100% 3rd year
after year of
SR Plan
grant
01/01/2025 –
2021 BE 18/08/2021
01/01/2025
30/04/2029
€ 64.76
85,000
85,000
0
0
0
0
0
0
0
0
0
0
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
100% 3rd year
after year of
grant
01/01/2021 –
WP 2017 30/08/2017
01/01/2021
16/05/2025
€ 80.57
60,000
60,000
100% 3rd year
after year of
grant
01/01/2022 –
WP 2018 18/06/2018
01/01/2022
18/04/2026
€ 79.88
80,000
Mr. Bart Filius
100% 3rd year
after year of
grant
01/01/2023 –
WP 2019 12/07/2019
01/01/2023
10/04/2027
€ 95.11
65,000
100% 3rd year
after year of
SR Plan
grant
01/01/2024 –
2020 16/06/2020
01/01/2024
17/04/2028 € 168.42
50,000
100% 3rd year
after year of
SR Plan
grant
01/01/2025 –
2021 BE 18/08/2021
01/01/2025
30/04/2029
€ 64.76
50,000
50,000
0
0
0
0
0
145
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
100% 3rd year
after year of
grant
01/01/2018 –
WP 2014 14/10/2014
01/01/2018
24/07/2022
€ 14.54
10,000
10,000
20,000
100% 3rd year
after year of
grant
01/01/2019 –
WP 2015 29/06/2015
01/01/2019
29/04/2023
€ 28.75
30,000
30,000
100% 3rd year
after year of
grant
02/03/2019 –
WP 2015.B 02/03/2016
02/03/2019
21/12/2023
€ 49.00
40,000
40,000
100% 3rd year
after year of
grant
01/01/2020 –
WP 2016 31/07/2016
01/01/2020
31/05/2024
€ 46.10
55,000
55,000
Dr. Andre
Hoekema
100% 3rd year
after year of
grant
01/01/2021 –
WP 2017 30/08/2017
01/01/2021
16/05/2025
€ 80.57
60,000
60,000
100% 3rd year
after year of
grant
01/01/2022 –
WP 2018 18/06/2018
01/01/2022
18/04/2026
€ 79.88
50,000
100% 3rd year
after year of
grant
01/01/2023 –
WP 2019 12/07/2019
01/01/2023
10/04/2027
€ 95.11
50,000
100% 3rd year
after year of
SR Plan
grant
01/01/2024 –
2020 16/06/2020
01/01/2024
17/04/2028 € 168.42
30,000
100% 3rd year
after year of
SR Plan
grant
01/01/2025 –
2021 BE 18/08/2021
01/01/2025
30/04/2029
€ 64.76
30,000
30,000
0
0
0
0
0
0
0
0
0
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
100% 3rd year
after year of
grant
02/03/2019 –
WP 2015.B 02/03/2016
02/03/2019
21/12/2023
€ 49.00
35,000
35,000
5,000
100% 3rd year
after year of
grant
01/01/2020 –
WP 2016 16/08/2016
01/01/2020
31/05/2024
€ 46.10
60,000
60,000
100% 3rd year
after year of
grant
01/01/2021 –
WP 2017 30/08/2017
01/01/2021
16/05/2025
€ 80.57
60,000
60,000
Dr. Piet
Wigerinck
100% 3rd year
after year of
grant
01/01/2022 –
WP 2018 18/06/2018
01/01/2022
18/04/2026
€ 79.88
60,000
100% 3rd year
after year of
grant
01/01/2023 –
WP 2019 12/07/2019
01/01/2023
10/04/2027
€ 95.11
50,000
100% 3rd year
after year of
SR Plan
grant
01/01/2024 –
2020 16/06/2020
01/01/2024
17/04/2028 € 168.42
40,000
100% 3rd year
after year of
SR Plan
grant
01/01/2025 –
2021 BE 02/07/2021
01/01/2025
30/04/2029
€ 64.76
40,000
40,000
0
0
0
0
0
0
0
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
Dr. Walid
Abi-Saab
100% 3rd year
after year of
grant
06/04/2020 –
WP 2016.B 06/04/2017
06/04/2020
19/01/2025
€ 62.50
10,000
10,000
100% 3rd year
after year of
grant
01/01/2021 –
WP 2017 30/08/2017
01/01/2021
16/05/2025
€ 80.57
45,000
45,000
100% 3rd year
after year of
grant
01/01/2022 –
WP 2018 18/06/2018
01/01/2022
18/04/2026
€ 79.88
60,000
100% 3rd year
after year of
grant
01/01/2023 –
WP 2019 12/07/2019
01/01/2023
10/04/2027
€ 95.11
50,000
100% 3rd year
after year of
SR Plan
grant
01/01/2024 –
2020 23/06/2020
01/01/2024
17/04/2028 € 168.42
40,000
100% 3rd year
after year of
SR Plan
grant
01/01/2025 –
2021 BE 18/08/2021
01/01/2025
30/04/2029
€ 64.76
40,000
40,000
0
0
0
0
0
0
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting
period
Exercise
Exercise
period
price
Number of
Number of
SRs
SRs out-
SRs exer-
offered &
standing
cisable per
accepted
per 31/12/
31/12/
during
2021
2021
2021
SRs
exercised
during
2021
SRs
expired
in 2021
100% 3rd year
after year of
grant
01/01/2021 –
WP 2017 30/08/2017
01/01/2021
16/05/2025
€ 80.57
60,000
60,000
100% 3rd year
after year of
grant
01/01/2022 –
WP 2018 18/06/2018
01/01/2022
18/04/2026
€ 79.88
30,000
Mr. Michele
Manto
100% 3rd year
after year of
grant
01/01/2023 –
WP 2019 12/07/2019
01/01/2023
10/04/2027
€ 95.11
40,000
100% 3rd year
after year of
SR Plan
grant
01/01/2024 –
2020 16/06/2020
01/01/2024
17/04/2028 € 168.42
30,000
100% 3rd year
after year of
SR Plan
grant
01/01/2025 –
2021 BE 02/07/2021
01/01/2025
30/04/2029
€ 64.76
30,000
30,000
(1) Warrant Plan (WP) and Subscription Rights Plan (SR Plan)
0
0
0
0
0
At the end of 2021, Mr. Onno van de Stolpe held 438,889 shares of Galapagos NV and 870,000
subscription rights, Mr. Bart Filius held 25,000 shares and 305,000 subscription rights, Dr. Walid Abi-
Saab held 2,500 shares and 245,000 subscription rights, Dr. Andre Hoekema held 42,857 shares
and 355,000 subscription rights, and Mr. Michele Manto held 1,000 shares and 190,000 subscription
rights.
RSUs offered to, vested or expired for the management board
members
In 2021, the management board were offered new RSUs under 2021 RSU Annual Long-Term
Incentive Plan and the 2021 RSU Retention Plan, subject to acceptance. The members of the
management board accepted all RSUs offered to them, except for two management board
members who did not accept their grant under the 2021 RSU Annual Long-Term Incentive Plan.
The grant under the 2021 RSU Annual Long-Term Incentive Plan is the long-term portion of the
bonus for 2020 and this RSU grant will vest in full three years after the offer date. The grant under
the 2021 RSU Retention Plan has a four-year vesting period, with 25% vesting each year and a
first vesting date on 1 May 2022. The RSUs are not transferable. The table below sets forth the
total number of RSUs offered to each management board member during 2021: Mr. Onno van
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
de Stolpe: 63,830 RSUs, Mr. Bart Filius: 62,730 RSUs, Dr. Piet Wigerinck: 835 RSUs, Dr. Walid Abi-
Saab: 44,038 RSUs, Dr. Andre Hoekema: 52,312 RSUs and Mr. Michele Manto: 31,694 RSUs.
The main characteristics of the RSU plans for the management board members are as follows:
The RSUs are offered for no consideration;
Three or four year vesting periods apply, as set forth per plan in the table below;
In case of termination of service before the vesting date, forfeiture rules apply.
Each RSU represents the right to receive, at Galapagos’ discretion, one Galapagos share or a payment
in cash of an amount equivalent to the volume-weighted average price of the Galapagos share on
Euronext Brussels over the 30-calendar day period preceding the relevant vesting date. However, in
respect of management board members, any vesting prior to the third anniversary of the offer date
will always give rise to a payment in cash rather than a delivery of shares as an incentive.
No RSUs expired during financial year 2021. The table below sets forth the main characteristics
of RSU plans issued to the management board members in 2019, 2020 and 2021, the number
of RSUs awarded to each management board member under the respective RSU Plan, and the
number of RSUs vested and paid out to each management board member during 2021, including
for our former CSO, Dr. Wigerinck:
Management
board member
Plan
Offer date
Vesting period
Vesting date
Number of
RSUs vested
RSUs offered
during 2021
Plan 2019.I
16/10/2019
after offer date
16/10/2022
15,000
100% three years
Plan 2019.II
16/10/2019
vesting period
25% / year
Four-year
50% two years after
offer date
50% three years after
Plan 2019.III
16/10/2019
offer date
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
25,606
6,401
16,922
8,461
Mr. Onno van de
100% three years
Stolpe
Plan 2020.I
06/05/2020
after offer date
06/05/2023
2,392
Plan 2020.II
06/05/2020
vesting period
100% three years
25% / year
Four-year
01/05/2021
01/05/2022
01/05/2023
01/05/2024
15,925
3,981
Plan 2021.I
05/05/2021
after offer date
05/05/2024
2,111
Plan 2021.IV
24/09/2021
vesting period
25% / year
Four-year
01/05/2022
01/05/2023
01/05/2024
01/05/2025
61,719
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Management
board member
Plan
Offer date
Vesting period
Vesting date
Number of
RSUs vested
RSUs offered
during 2021
Plan 2019.I
16/10/2019
after offer date
16/10/2022
5,000
100% three years
Mr. Bart Filius
Dr. Andre Hoekema
Plan 2019.II
16/10/2019
vesting period
25% / year
Four-year
50% two years after
offer date
50% three years after
Plan 2019.III
16/10/2019
offer date
100% three years
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
17,924
4,481
16,922
8,461
Plan 2020.I
06/05/2020
after offer date
06/05/2023
1,452
Plan 2020.II
06/05/2020
vesting period
100% three years
25% / year
Four-year
01/05/2021
01/05/2022
01/05/2023
01/05/2024
11,148
2,787
Plan 2021.I
05/05/2021
after offer date
05/05/2024
1,011
Plan 2021.IV
24/09/2021
vesting period
100% three years
25% / year
Four-year
01/05/2022
01/05/2023
01/05/2024
01/05/2025
61,719
Plan 2019.I
16/10/2019
after offer date
16/10/2022
3,000
50% two years after
offer date
50% three years after
Plan 2019.III
16/10/2019
offer date
100% three years
16/10/2021
16/10/2022
16,922
8,461
Plan 2020.I
06/05/2020
after offer date
06/05/2023
832
Plan 2021.I
05/05/2021
after offer date
05/05/2024
879(1)
100% three years
Plan 2021.IV
24/09/2021
vesting period
01/05/2025
51,433
25% / year
Four-year
01/05/2022
01/09/2022(2)
01/05/2024
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Management
board member
Plan
Offer date
Vesting period
Vesting date
Number of
RSUs vested
RSUs offered
during 2021
Plan 2019.I
16/10/2019
after offer date
16/10/2022
5,000
100% three years
Plan 2019.II
16/10/2019
vesting period
25% / year
Four-year
50% two years after
offer date
50% three years after
Dr. Piet Wigerinck
Plan 2019.III
16/10/2019
offer date
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
17,924
4,481
10,153
5,076
Plan 2020.I
06/05/2020
after offer date
06/05/2023
932
100% three years
Dr. Walid Abi-Saab
Plan 2020 II.
06/05/2020
vesting period
100% three years
25% / year
Four-year
01/05/2021
01/05/2022
01/05/2023
01/05/2024
11,148
2,787
Plan 2021.I
05/05/2021
after offer date
05/05/2024
835(3)
Plan 2019.I
16/10/2019
after offer date
16/10/2022
5,000
100% three years
Plan 2019.II
16/10/2019
vesting period
25% / year
Four-year
50% two years after
offer date
50% three years after
Plan 2019.III
16/10/2019
offer date
100% three years
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
17,924
4,481
10,153
5,076
Plan 2020.I
06/05/2020
after offer date
06/05/2023
932
Plan 2020.II
06/05/2020
vesting period
100% three years
25% / year
Four-year
01/05/2021
01/05/2022
01/05/2023
01/05/2024
11,148
2,787
Plan 2021.I
05/05/2021
after offer date
05/05/2024
835
Plan 2021.IV
24/09/2021
vesting period
25% / year
Four-year
01/05/2022
01/05/2023
01/05/2024
01/05/2025
43,203
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Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Management
board member
Plan
Offer date
Vesting period
Vesting date
Number of
RSUs vested
RSUs offered
during 2021
Plan 2019.II
16/10/2019
vesting period
100% three years
25% / year
Four-year
01/05/2020
01/05/2021
01/05/2022
01/05/2023
5,121
1,280
Plan 2020.I
06/05/2020
after offer date
06/05/2023
612
Mr. Michele Manto
Plan 2020.II
06/05/2020
vesting period
100% three years
25% / year
Four-year
01/05/2021
01/05/2022
01/05/2023
01/05/2024
5,308
1,327
Plan 2021.I
05/05/2021
after offer date
05/05/2024
835
Plan 2021.IV
24/09/2021
vesting period
25% / year
Four-year
01/05/2022
01/05/2023
01/05/2024
01/05/2025
30,859
(1) Dr. Andre Hoekema did not accept his offer under the 2021.I RSU Plan.
(2) Upon substantiated recommendation of the remuneration and nomination committee, the supervisory board approved a deviation of the vesting
rules under the RSU Plan 2021.IV. The second vesting of 25% of the RSU grant under the aforementioned plan (corresponding with 12,858 RSUs) will
occur earlier than under the normal plan rules.
(3) Dr. Piet Wigerinck did not accept his offer under the 2021.I RSU Plan.
Pursuant to the terms and conditions of the RSU plans all unvested RSUs of Dr. Piet Wigerinck,
as set out in the table above, became null and void on his termination date, 30 November
2021. Reference is made to the one-time lump-sum payment as compensation for his unvested
outstanding RSUs as set out in the section on severance payments for departing management
board members.
In 2022, as part of the management board’s long-term variable remuneration, a number of
RSUs equivalent to the 2021 short-term cash bonuses (based on the average share price of the
Galapagos share on Euronext Amsterdam during the month of April 2022) will be granted to
the management board members under the 2022 RSU Annual Long-Term Incentive Plan (i.e. the
long-term portion of the bonus for 2021), except to the retiring CEO.
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Galapagos NV Annual Report 2021
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Evolution of remuneration and company
performance
The below table shows the annual change of remuneration of each individual supervisory and
management board member, of the performance of the company and of average remuneration
on a full-time equivalent basis of Galapagos’ employees, other than supervisory and management
board members, over the five most recent financial years.
Comparative table of remuneration and company performance
2021
%
change
2020
%
change
2019
%
change
2018
%
change
2017
Director's remuneration(1)
Management board(2) (3)
Mr. Onno van de
Stolpe , CEO
Mr. Bart Filius,
President, CFO & COO
Dr. Andre Hoekema,
CBO
Dr. Piet Wigerinck,
CSO(4)
Dr. Walid Abi-Saab,
CMO(5)
Mr. Michele Manto,
CCO(6)
Supervisory board(7) (8)
Dr. Rajesh Parekh
Mr. Howard Rowe
Ms. Katrine Bosley
Dr. Mary Kerr
€996,000
31%
€758,400
(82%)
€4,322,105
209%
€1,398,236
(2%)
€1,422,880
€2,328,250
11%
€2,091,784
(73%)
€7,666,471
242%
€2,242,627
49%
€1,503,607
€696,406
44%
€483,706
(86%)
€3,558,571
275%
€948,675
109%
€453,270
€1,654,433
17%
€1,412,283
(75%)
€5,747,118
251%
€1,636,303
210%
€527,571
€469,781
€938,325
€582,125
10%
83%
25%
€425,190
(87%)
€3,346,490
360%
€728,244
€511,416
(90%)
€5,071,465
320%
€1,207,775
€467,518
(81%)
€2,461,071
179%
€882,807
€1,368,005
(1%)
€1,386,058
(66%)
€4,127,775
195%
€1,400,211
26%
83%
18%
74%
€579,764
€661,725
€745,795
€805,999
€576,969
23%
€467,518
(77%)
€2,075,500
277%
€550,542
(26%)
€745,795
€1,368,929
(1%)
€1,386,614
(63%)
€3,790,471
250%
€1,082,398
(51%)
€2,206,938
€490,469
€931,498
€120,000
€220,000
€70,000
€120,000
€65,000
29%
36%
0%
0%
(7%)
(4%)
0%
€380,518
€684,903
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
€120,000
33%
€90,000
0%
€90,000
0%
€90,000
€220,000
(62%)
€577,950
183%
€204,300
127%
€90,000
€75,000
36%
€55,000
5%
€52,500
17%
€45,000
€125,000
(58%)
€298,975
173%
€109,650
144%
€45,000
€65,000
44%
€45,000
0%
€45,000
0%
€45,000
€65,000
(43%)
€115,000
(60%)
€288,975
183%
€102,150
127%
€45,000
€65,000
€115,000
0%
0%
€65,000
44%
€45,000
3%
€43,750
9%
€40,000
€115,000
(60%)
€288,975
186%
€100,900
152%
€40,000
154
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Comparative table of remuneration and company performance
2021
%
change
2020
%
change
2019
%
change
2018
%
change
2017
€65,000
€115,000
€65,000
€115,000
N/A
N/A
0%
0%
47%
47%
N/A
N/A
€65,000
117%
€30,000
€115,000
(58%)
€273,975
€44,164
€77,999
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Mr. Peter Guenter(9)
Dr. Elisabeth
Svanberg(10)
Mr. Daniel O’Day
Dr. Linda Higgins
Company performance
Financial KPIs (thousand of €, except for the stock price and number of employees)
Operational Cash
burn (-) / operational
cash flow
(564,840)
9%
(517,400)
(116%)
3,162,804 2,097%
(158,379)
R&D expenditure (11)
491,707
(7%)
531,354
24%
427,320
32%
322,875
(3%)
48%
(154,089)
218,502
Cash position on 31
Dec (12)
4,703,177
(9%)
5,169,349
(11%)
5,780,832
348%
1,290,796
12%
1,151,211
# of employees on 31
Dec (13)
Stock price
performance (Last
tradying day FY)
Operational KPIs
# of new validated
targets
# of new PCCs
# of PoC toplines
# of Ph3 starts
1,309
(12%)
1,489
48%
1,003
38%
725
21%
600
49.22
(39%)
80.48
(57%)
186.50
132%
80.56
2%
78.98
4
2
4
0
5
3
3
0
6
3
3
1
2
4
4
2
9
5
2
0
Average remuneration of employees on FTE basis
Employees of the
Group(14)
€ 102,471
(2%)
€104,290
4%
€100,682
4%
€97,139
4%
€93,726
(1) The directors' remuneration overview contains for each individual management board and supervisory board member two separate rows, whereby
the first row sets out their cash remuneration, being the annual base salary, cash bonus and (if any) exceptional bonus, to enable the comparison
with the average remuneration of employees on FTE basis, and the second row sets out their total remuneration, including equity-related
remuneration such as granted SRs and vested RSUs.
(2) The first row shows the cash remuneration of each management board member, being the annual base salary, cash bonus and (if any) exceptional
bonus.
(3) The second row shows the total remuneration of each management board member, including equity-based remuneration such as RSUs vested and
subscription rights granted during the year. The value of the subscription rights is calculated by comparing the exercise price of the subscription
right plan with the average share price as quoted on Euronext Brussels and Amsterdam during the respective financial year. For example, for
financial year 2021 the exercise price of the Subscription Right Plan 2021 BE is compared with the average share price as quoted on Euronext
Brussels and Amsterdam during the financial year 2021.
(4) Management board member until 30 November 2021. Both rows set out his remuneration from 1 January 2021 until 30 November 2021, excluding
his severance package.
(5) Management board member as of 1 January 2017. The total remuneration for FY 2017, as set out on the second row for FY 2017, includes Dr. Walid
Abi-Saab's hiring grant of subscription rights under Warrant Plan 2016 (B).
155
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Comparative table of remuneration and company performance
2021
%
change
2020
%
change
2019
%
change
2018
%
change
2017
(6) Management board member as of 1 January 2020.
(7) The first row shows the total cash remuneration of each supervisory board member, being the board fees.
(8) The second row shows the total remuneration of each supervisory board member, including equity-based remuneration such as subscription rights
granted during the year. As from 1 January 2020, Galapagos no longer grants any subscription rights to supervisory board members.
(9) Supervisory board member as of 30 April 2019.
(10) Supervisory board member as of 28 April 2020.
(11) Prior to the financial year ended 31 December 2021, R&D expenditure presented on this line is reflecting the total Group related expenditure
including Fidelta, our fee-for-service business sold to Selvita on 4 January 2021, classified as discontinued operations in our 2020 consolidated
financial statements. R&D expenditure of our continuing operations presented in our consolidated financial statement were €523,667 thousands for
the financial year ended 31 December 2020, €420,090 thousands for the financial year ended 31 December 2019 and €316,222 thousands for the
financial year ended 31 December 2018.
(12) Cash position on 31 December 2020 included €7,884 thousands of cash held in Fidelta and classified as assets held for sale in our 2020 consolidated
financial statements.
(13) The number of employees per 31 December includes employees and insourced personnel (external contractors). At 31 December 2020, the number
of employees included 185 employees of our fee for service activity Fidelta, which was sold to Selvita on 4 January 2021.
(14) The average remuneration of employees is calculated on FTE basis, excluding trainees and internships, for employees employed for the full
applicable financial year. It takes into account the employees' base salary, annual cash bonus and (if any) exceptional cash bonus during the
respective financial year. During 2019, all Galapagos' employees received an exceptional bonus as a result of the Gilead transaction. Annual cash
bonuses are included in the year upon which performance is based and not in the year in which they are paid. Due to the timing of the 2021 year-
end process, the actual annual figures for employees had not been finalized by the date of this report. Therefore, 2021 annual bonus figures
represent target figures multiplied by the applicable approved organizational bonus funding scores, being the company’s best estimate of actual
bonus outcomes.
156
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Ratio between the highest and lowest remuneration
The ratio between the highest and lowest remuneration at Galapagos during financial year 2021
is: 1:33.
The ratio is calculated on the basis of the lowest FTE pay per 31 December 2021, excluding
trainees and internships. The remuneration which has been taken into account in this exercise
includes the annual base salary, annual cash bonus and (if any) exceptional bonus; annual cash
bonus is included in the year upon which performance is based and not in the year in which
it is paid. Due to the timing of the 2021 year-end process, the actual annual bonus figures for
employees below the management board level had not been finalized by the date of this report.
Therefore, target figures for these employees were used, multiplied by the applicable approved
organizational bonus funding scores, being the company’s best estimate of 2021 actual bonus
outcomes.
Minimum share ownership
From the financial year 2020, the remuneration policy has set a minimum threshold of shares
to be held at any time by the CEO to the number of shares equivalent to one year of the CEO’s
annual base salary and by the other management board members to the number of shares
equivalent to six months’ of the relevant management board member’s annual base salary.
Thresholds will be re-calculated on an annual basis and need to be reached within four years.
Management board member
Onno van de Stolpe, CEO
Bart Filius, President, CFO & COO
Andre Hoekema, CBO
Piet Wigerinck, CSO(3)
Walid Abi-Saab, CMO
Michele Manto, CCO
Minimum share
Minimum share
ownership
ownership
Actual share
Objective
2020(1)
Objective
2021(2)
ownership per
31/12/2021
3,218
1,073
966
1,073
1,073
746
7,753
2,622
2,292
2,584
2,584
2,019
438,889
25,000
42,857
55,200
2,500
1,000
(1) The 2020 threshold needs to be reached within four years, i.e. 1 January 2024.
(2) The 2021 threshold needs to be reached within four years, i.e. 1 January 2025.
(3) Management board member until 30 November 2021.
157
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Severance clauses and payments
Severance payments for departing management board
members
In 2021 Dr. Piet Wigerinck, CSO and management board member,
left Galapagos. Upon
substantiated recommendation of the nomination and remuneration committee, the supervisory
board approved the following severance package: (i) a severance compensation equal to six
(ii) a one-time lump-sum payment of €553,766 as
months of remuneration,
compensation for his unvested outstanding RSUs on his termination date and (iii) a non-compete
of 12 months after the termination date in consideration of the payment by Galapagos of a
monthly fee of €35,416.66 as stipulated in his management contract, except if Galapagos waives
enforcement of the non-compete. Galapagos also paid Dr. Wigerinck’s 2021 pro rata (11/12)
maximum cash bonus.
i.e. €212,500,
Dr. Wigerinck will not receive the long-term portion of the 2021 bonus, being a number of RSUs
equivalent to the 2021 short-term cash bonus. He qualifies as a good leaver under the terms and
conditions of the subscription right plans and this is not part of his severance package.
On 30 August 2021, Galapagos announced the planned retirement of its CEO Onno van de
Stolpe. After a transition period during which the retiring CEO will hand over his activities,
Stoffels IMC BV, permanently represented by Dr. Paul Stoffels will fully take over as CEO effective
1 April 2022. Upon substantiated recommendation of
the nomination and remuneration
committee, the supervisory board approved the following retirement package: a non-compete of
12 months against the payment of a monthly fee of €150,000 by Galapagos, except if Galapagos
waives enforcement of the non-compete. Until 31 October 2022, Onno van de Stolpe will execute
a purely advisory role as advisory member of the management board, for which he will continue
including entitlement to RSU pay-outs until the
to receive his base salary and benefits,
aforementioned date. In 2022, Onno van de Stolpe will not be eligible to 2022 performance
variable remuneration,
i.e. a cash bonus and the long-term portion of the bonus for 2021.
Furthermore, he will not be eligible for any equity grants (RSUs and subscription rights) in 2022.
He qualifies as a good leaver under the terms and conditions of the subscription right plans and
this is not part of his severance package.
Claw-back right of Galapagos relating to variable
remuneration
As from financial year 2020, contractual provisions apply to each management board member
to ensure that Galapagos has the right to have each management board member forfeit any
unvested RSUs, deferred portions of previous cash bonuses or unvested subscription rights in
the event of a restatement of the financial statements that has a material negative effect on
Galapagos or a material breach of our Code of Conduct and Ethics.
During the financial year 2021 no claw-back events occurred.
158
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
The 2021 RSU plans and 2021 subscription right plans contain bad leaver provisions that can
result in forfeiture of any unvested RSU and/or subscription right grants in case the beneficiary
leaves Galapagos prior to the relevant vesting date.
Deviations from the remuneration policy
Galapagos’ remuneration policy sets out that the supervisory board may decide to deviate
from any items of the policy if necessary to serve the long-term interests and sustainability
of Galapagos. Any such deviation must be discussed at the nomination and remuneration
committee, which will provide a substantiated recommendation to the supervisory board.
During the financial year 2021, the supervisory board decided to deviate from the Galapagos’
remuneration policy, upon substantiated recommendation of the nomination and remuneration
committee, with the intention of serving the long-term interests and sustainability of Galapagos
and in view of a successful and thorough implementation of the leadership transition whilst
guaranteeing continuity, at three occasions:
On 22 June 2021, a termination package for Dr. Wigerinck has been approved, being,
in
addition to a 6 months’ severance compensation of €212,500, a one-time lump-sum payment
of €553,766 for his unvested outstanding RSUs at his termination date and a non-compete
of 12 months in consideration of the payment by Galapagos of a monthly fee €35,416.66
as stipulated in his management contract. However, his total termination package does not
exceed his annual remuneration for the financial year 2020 (for which shareholder approval
would have been required);
On 26 August 2021, a retirement package for Mr. van de Stolpe has been approved, being a
non-compete of 12 months in consideration of the payment by Galapagos of a monthly fee of
€150,000. However, his total retirement package does not exceed his annual remuneration
for the financial year 2020 (for which shareholder approval would have been required); and
On 20 September 2021, a one-time deviation of the vesting rules of the RSU Plan 2021.IV
for the RSU grant under the aforementioned plan to Dr. Hoekema has been approved. The
second vesting of 25% (corresponding with 12,858 RSUs) will occur earlier than under the
normal plan rules.
159
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Conflict of interests and related parties
We consider that Gilead became a related party of Galapagos in 2019 because of Gilead’s then
25.84% shareholding (25.49% on 31 December 2021) in Galapagos and the fact that Gilead is
entitled to propose two candidates to be appointed to our supervisory board under the share
subscription agreement.
On 6 September 2021, we entered into a related party transaction with Gilead within the
meaning of article 7:116 of the Belgian Companies Code, by agreeing to transfer the sponsorship
of and the operational and financial responsibility for the DIVERSITY clinical study, evaluating
filgotinib in Crohn’s Disease, and its long-term extension study, from Gilead to us. Daniel O’Day
and Linda Higgins only participated in the discussion among the supervisory board prior to the
deliberation and resolutions in relation to the DIVERSITY Letter Agreement, and then recused
themselves from the supervisory board meeting held on 4 September 2021 regarding this
related party transaction, since they are representatives of Gilead. The remaining supervisory
board members considered that the related-party transaction’s approval mechanism didn’t need
to be applied, since the value of the DIVERSITY Letter Agreement is less than 1% of the Company’s
consolidated net equity (based on the consolidated interim financial statements of Galapagos
for the six months ended 30 June 2021) and since Galapagos is therefore able to rely on the
materiality exemption set out in article 7:116, § 1, 2° of the Belgian Companies Code. A more
detailed explanation of our transactions with Gilead in 2021 can be found in the section titled
Agreements with major Galapagos NV shareholders. We further refer to note 31.
In the event of a transaction where a supervisory board member’s interest conflicts with the
interest of Galapagos NV, the board member shall notify the supervisory board in advance of
the conflict and will act in accordance with the relevant rules of the Belgian Companies Code
(i.e. article 7:115 of the Belgian Companies Code for supervisory board members). In the event
of a transaction where a management board member’s interest conflicts with the interest of
Galapagos NV, the management board shall refer the decision regarding such transaction to the
supervisory board.
In addition, Galapagos’ Corporate Governance Charter and Galapagos’ Related Person
Transaction Policy contain procedures for transactions between Galapagos and its supervisory
board members, management board members, major shareholders or any of their immediate
family members and affiliates. Without prejudice to the procedure defined in articles 7:115
and 7:117 of the Belgian Companies Code, these policies provide that all transactions between
Galapagos and its supervisory board members, management board members or
its
representatives need the approval of the audit committee and the supervisory board, which
approval can only be provided for transactions at normal market conditions. Moreover, conflicts
of interest, even in the event they are not a conflict of interest within the meaning of articles 7:115
and 7:117 of the Belgian Companies Code, are enacted in the meeting minutes, and the relevant
board member cannot participate in the voting.
160
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
In 2021, the following conflict of interests between Galapagos NV and a director within the
meaning of article 7:115 of the Belgian Companies Code was noted:
in a meeting of the supervisory board held on 4 September 2021, the following was reported
in accordance with article 7:115 of the Belgian Companies Code in connection with the
proposed DIVERSITY Letter Agreement: the chairman declared that Daniel O’Day and Linda
Higgins had informed him that, since they are representatives of Gilead, they might have a
conflict of interest in relation to the resolutions to be passed by the supervisory board in
relation to the DIVERSITY Letter Agreement. Accordingly, Daniel O’Day and Linda Higgins only
participated in the discussion among the supervisory board prior to the deliberation and
resolutions in relation to the DIVERSITY Letter Agreement, and then recused themselves for
the meeting.
Code of Business Conduct and Ethics
In 2021, we have established a new Code of Business Conduct and Ethics to ensure that
our supervisory board members, management board members and employees are making
ethical and legal decisions when conducting Galapagos’ business and performing their day-
to-day duties. We expect our supervisory board members, management board members and
employees to conduct business with integrity, ethics and respect for human rights. We expect
them to turn away from conflicts of interest, corruption and fraud. To this end, we give trainings
on this new Code to our employees, including our subsidiaries’ employees. So far, since the
launch of our new Code of Business Conduct and Ethics, 93.5% of our employees have
completed the training.
The new Code of Business Conduct and Ethics is available at https://www.glpg.com/
governance-information.
One breach of our Code of Business Conduct and Ethics was reported to the audit committee in
2021.
161
Galapagos NV Annual Report 2021
CORPORATE GOVERNANCE
Statement by the supervisory board
The supervisory board of Galapagos NV, represented by all its members, declares that, as far as
it is aware, the statutory accounts and consolidated financial statements, prepared according to
the applicable standards for financial statements, give a true and fair view of the equity, financial
position and the results of Galapagos as of 31 December 2021.
The supervisory board of Galapagos NV, represented by all its members, further declares that, as
far as it is aware, this report to the shareholders for the financial year ending on 31 December
2021, gives a true and fair view on the development, results and position of Galapagos and on
the most important risks and uncertainties with which Galapagos is confronted.
The supervisory board will submit proposed resolutions to the shareholders’ meeting to approve
the annual accounts for the financial year 2021, and to release the supervisory board members
and the statutory auditor from liability for the performance of their mandate during the financial
year ended 31 December 2021.
Mechelen, 22 March 2022
On behalf of the supervisory board
Howard Rowe
Chairman of the audit committee
Raj Parekh
Chairman of the supervisory board
162
Galapagos NV Annual Report 2021
Financial
statements
Consolidated and non-
consolidated financial
statements for 2021
Foundation & Future
FINANCIAL STATEMENTS
Consolidated financial statements
Consolidated statements of income and
comprehensive income/loss (-)
Consolidated income statement
(thousands of €, except per share data)
Product net sales
Year ended 31 December
2021
14,753
2020
2
Collaboration revenues
470,093
478,051
Total net revenues
484,846
478,053
Cost of sales
(1,629)
-
Research and development expenditure
(491,707)
(523,667)
Sales and marketing expenses
(69,956)
(66,468)
General and administrative expenses
(140,899)
(118,757)
Other operating income
53,749
52,207
Operating loss
(165,596)
(178,632)
Fair value re-measurement of warrants
Other financial income
2,960
70,548
3,034
18,667
Other financial expenses
(30,911)
(152,844)
Loss before tax
(122,999)
(309,775)
Notes
6
6
7
7
7
7
7
9
10
10
Income taxes
(2,423)
(1,226)
11
Net loss from continuing operations
(125,422)
(311,001)
164
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
(thousands of €, except per share data)
2021
2020
Notes
Net profit from discontinued operations,
Year ended 31 December
net of tax
Net loss
Net loss attributable to:
22,191
5,565
26
(103,231)
(305,436)
Owners of the parent
(103,231)
(305,436)
Basic and diluted loss per share
(1.58)
(4.69)
12
Basic and diluted loss per share from continuing
operations
(1.91)
(4.78)
The accompanying notes form an integral part of these financial statements.
165
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income / loss (-)
(thousands of €)
Net loss
Items that will not be reclassified subsequently
to profit or loss:
Year ended 31 December
2021
2020
Notes
(103,231)
(305,436)
Re-measurement of defined benefit obligation
730
(6,065)
Items that may be reclassified subsequently to
profit or loss:
Translation differences, arisen from translating
foreign activities
736
(1,024)
Realization of translation differences upon sale/
liquidation of foreign operations
731
(1,023)
Other comprehensive income/loss (-),
net of income tax
2,197
(8,112)
Total comprehensive loss attributable to:
Owners of the parent
(101,034)
(313,548)
Total comprehensive loss attributable to owners
of the parent arises from:
Continuing operations
(123,956)
(318,841)
Discontinued operations
22,922
5,293
Total comprehensive loss
(101,034)
(313,548)
The accompanying notes form an integral part of these financial statements.
166
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Consolidated statements of financial position
(thousands of €)
Assets
31 December
2021
2020
Notes
Intangible assets
60,103
67,565
Property, plant and equipment
137,512
103,378
Deferred tax assets
Non-current trade receivables
4,032
-
4,475
50,000
Non-current R&D incentives receivables
127,186
111,624
Other non-current assets
2,473
11,343
Non-current assets
331,306
348,384
Inventories
20,569
36
Trade and other receivables
111,337
148,418
Current R&D incentives receivables
16,827
24,104
Current financial investments
2,469,809
3,026,278
Cash and cash equivalents
2,233,368
2,135,187
Other current assets
9,945
11,917
Current assets from continuing operations
4,861,854
5,345,941
13
14
22
18
16
15
17
18
16
19
20
18
Assets classified as held for sale
-
23,406
26
Total current assets
4,861,854
5,369,347
Total assets
5,193,160
5,717,731
167
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
(thousands of €)
Equity and liabilities
31 December
2021
2020
Notes
Share capital
292,075
291,312
Share premium account
2,730,391
2,727,840
Other reserves
(10,177)
(10,907)
Translation differences
(1,722)
(3,189)
Accumulated losses
Total equity
Retirement benefit liabilities
Non-current lease liabilities
Other non-current liabilities
(367,205)
(334,701)
2,643,362
2,670,355
11,699
19,655
7,135
14,996
23,035
8,096
Non-current deferred income
1,944,836
2,365,974
Non-current liabilities
1,983,325
2,412,101
Current lease liabilities
7,204
6,401
Trade and other liabilities
137,418
172,386
Current tax payable
Current financial instruments
1,782
204
1,248
3,164
Current deferred income
419,866
443,159
Current liabilities from continuing operations
566,474
626,357
21
21
23
24
25
23
24
11
9
25
Liabilities directly associated with assets classified
as held for sale
-
8,917
26
Total current liabilities
566,474
635,274
Total liabilities
2,549,798
3,047,375
Total equity and liabilities
5,193,160
5,717,731
The accompanying notes form an integral part of these financial statements.
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Consolidated cash flow statements
(thousands of €)
Net loss of the year
2021
2020
Notes
(103,231)
(305,436)
Adjustment for non-cash transactions
57,718
230,723
Adjustment for items to disclose separately under
operating cash flow
11,227
4,067
Adjustment for items to disclose under investing
and financing cash flows
(28,847)
(2,472)
Change in working capital other than
deferred income
23,337
(146,092)
Decrease in deferred income
(453,720)
(207,787)
27
27
27
27
25
Cash used in operations
(493,516)
(426,998)
Interest paid
Interest received
Corporate taxes paid
(12,540)
2,913
(684)
(9,033)
10,054
(1,358)
Net cash flows used in operating activities
(503,827)
(427,336)
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(thousands of €)
2021
2020
Notes
Purchase of property, plant and equipment
(54,205)
(42,522)
Purchase of and expenditure in intangible
fixed assets
(3,674)
(48,793)
Proceeds from disposal of property,
plant and equipment
-
49
Purchase of current financial investments
(1,561,015)
(4,574,206)
Interest received related to current financial
investments
12
3,500
Sale of current financial investments
2,127,380
5,415,316
Cash in from disposals of subsidiaries, net of
cash disposed of
28,696
-
Acquisition of financial assets
-
(2,681)
Proceeds from sale of financial assets held at
fair value through profit or loss
4,045
6,626
Net cash flows generated from
investing activities
541,238
757,288
Payment of lease liabilities
(7,190)
(6,247)
Proceeds from capital and share premium
increases from exercise of subscription rights
3,314
28,287
Net cash flows generated from/used in (-)
financing activities
(3,876)
22,040
Increase in cash and cash equivalents
33,535
351,994
14
13
14
19
19
19
26
15
15
23
21
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(thousands of €)
2021
2020
Notes
Cash and cash equivalents at beginning of year
2,143,071
1,861,616
20
Increase in cash and cash equivalents
33,535
351,994
Effect of exchange rate differences on cash and
cash equivalents
56,763
(70,539)
Cash and cash equivalents at end of the year
2,233,368
2,143,071
20
31 December
(thousands of €)
2021
2020
Notes
Current financial investments
2,469,809
3,026,278
Cash and cash equivalents
2,233,368
2,135,187
Cash and cash equivalents classified as assets
held for sale
-
7,884
Current financial investments and cash and
cash equivalents
4,703,177
5,169,349
19
20
26
The accompanying notes form an integral part of these financial statements.
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Consolidated statements of changes in equity
Share
Share
premium
Translation
Other
Accumul.
(thousands of €)
capital
account
differences
reserves
losses
Total
On 1 January 2020
287,282
2,703,583
(1,142)
(4,842)
(109,223)
2,875,658
Net loss
(305,436)
(305,436)
Other comprehensive loss
(2,047)
(6,065)
(8,112)
Total comprehensive loss
(2,047)
(6,065)
(305,436)
(313,548)
Share-based compensation
Exercise of
79,959
79,959
subscription rights
4,031
24,257
28,288
On 31 December 2020
291,312
2,727,840
(3,189)
(10,907)
(334,701)
2,670,355
On 1 January 2021
291,312
2,727,840
(3,189)
(10,907)
(334,701)
2,670,355
Net loss
Other comprehensive
income
Total comprehensive
income/loss (-)
Share-based compensation
Exercise of
(103,231)
(103,231)
1,467
730
2,197
1,467
730
(103,231)
(101,034)
70,726
70,726
subscription rights
763
2,551
3,313
On 31 December 2021
292,075
2,730,391
(1,722)
(10,177)
(367,205)
2,643,362
The accompanying notes form an integral part of these financial statements.
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Notes to the consolidated financial
statements
1. General information
Galapagos NV is a limited liability company incorporated in Belgium and has its registered office
at Generaal De Wittelaan L11 A3, 2800 Mechelen, Belgium. In the notes to the consolidated
financial statements, references to “we”, “us,” “the group” or “Galapagos” include Galapagos NV
together with its subsidiaries.
We are an integrated biopharmaceutical company active in the discovery, development, and
commercialization of medicines with novel modes of action, several of which are currently in
clinical development in multiple diseases with high unmet medical need. Our highly flexible
discovery platform is applicable across many therapeutic areas.
Having achieved approval in the European Union and Great Britain for our first ever medicine
in RA and UC, we remain highly committed to progressing our pipeline of drug candidates to
address unmet medical needs and improve the lives of millions.
We devote substantially all of our resources to our drug discovery efforts from target discovery
through clinical development, and to our commercialization efforts for filgotinib in Europe.
The components of the operating result presented in the financial statements include the
following companies: Galapagos NV, Galapagos Biopharma Belgium BV, Galapagos Real Estate
Belgium BV (Mechelen, Belgium); Galapagos SASU (Romainville, France); Galapagos B.V.,
Galapagos Biopharma Netherlands B.V. and Galapagos Real Estate Netherlands B.V. (Leiden,
the Netherlands); Galapagos, Inc. and its subsidiary Xenometrix, Inc. (United States); Galapagos
GmbH (Basel, Switzerland); Galapagos Biotech Ltd (Cambridge, UK); Galapagos Biopharma
Germany GmbH (München, Germany); Galapagos Biopharma Spain S.L.U.
(Madrid, Spain),
Galapagos Biopharma Italy S.r.l. (Milan, Italy), Galapagos Biopharma Sweden AB (Stockholm,
Sweden), Galapagos Biopharma Norway AS (Oslo, Norway), Galapagos Biopharma Finland Oy
(Helsinki, Finland), Galapagos Biopharma Denmark ApS (Copenhagen, Denmark), Galapagos
Biopharma Austria GmbH (Vienna, Austria) and Galapagos Biopharma Ireland Ltd (Dublin,
Ireland).
Our continuing operations had 1,309 employees on 31 December 2021 (as compared to 1,304
employees on 31 December 2020) mainly working in the operating facilities in Mechelen (the
Italy, Spain and the
Belgian headquarters), the Netherlands, France, Switzerland, Germany,
United Kingdom.
On 4 January 2021 we sold of our fee-for-service business Fidelta to Selvita S.A. for a total
consideration of €37.1 million. Fidelta d.o.o. had 185 employees on 31 December 2020 working
in the operating facilities in Croatia. We classified the assets and the associated liabilities of
Fidelta as held for sale in our financial statements for the year ended 31 December 2020.
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Impact of COVID-19 on the financial statements
To date, we have experienced limited impact on our financial performance, financial position,
cash flows and significant judgements and estimates, although we continue to face additional
risks and challenges associated with the impact of the outbreak.
2. Summary of significant transaction
On 14 July 2019 we and Gilead announced that we entered into a 10-year global research
and development collaboration. Through this agreement, Gilead gained exclusive access to our
innovative portfolio of compounds, including clinical and preclinical programs and a proven drug
discovery platform. At inception of this collaboration in 2019, we received an upfront payment
€3,569.8 million ($3.95 billion) and a €960.1 million ($1.1 billion) equity investment from Gilead.
On the closing date of the transaction (23 August 2019) we concluded that the upfront payment
implicitly included a premium for the future issuance of warrant A and initial and subsequent warrant
B. The expected value of the warrants to be issued is treated as a contract liability (“warrant issuance
liability”) and reduces the transaction price until approval date of the issuance of the underlying
warrants. As from approval date, the allocation of the upfront payment to the respective warrant
becomes fixed and future changes in the fair value of the respective warrant are recognized in profit
or loss. As such, the part of the upfront payment allocated to the warrant A and initial warrant B
reflects the fair value of these financial liabilities at the warrant approval date (22 October 2019).
On 6 November 2019 Gilead exercised warrant A, which resulted in an additional equity
investment of €368.0 million.
Subsequent warrant B is still subject to approval by an extraordinary general meeting of
shareholders and is therefore still presented as warrant issuance liability in our deferred income
(we refer to note 25 for more information). The value allocated to the subsequent warrant B
reflects the fair value of the underlying liability on 31 December 2020 and 31 December 2021.
On 31 December 2021 the value of the subsequent warrant B decreased to €2.4 million, driven
by the decrease of our share price, and of the implied volatility in 2021.
At inception of this collaboration, we identified the following three performance obligations: (i) the
transfer of an extended license on GLPG1690, (ii) the granting of exclusive access to our drug
discovery platform (i.e. the IP, technology, expertise and capabilities) during the collaboration period
and exclusive option rights on our current and future clinical programs after Phase 2 (or, in certain
circumstances, the first Phase 3 study) outside Europe and (iii) an increased cost share from 20/
80 to 50/50 on the global development activities of filgotinib, as a result of the revised license and
collaboration agreement.
As part of the collaboration, Gilead also received option rights for GLPG1972, a Phase 2b
candidate for osteoarthritis, in the United States. In November 2020, Gilead however declined to
exercise its option for GLPG1972.
Since 22 October 2019, Gilead has had two representatives on the supervisory board of
Galapagos (Daniel O’Day and Linda Higgins).
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In Q4 2020, Gilead decided not to pursue FDA approval of the RA indication for filgotinib in the
U.S. as a result of Complete Response Letter (CRL) from the Food and Drug Administration (FDA).
Due to this, in December 2020 Gilead and we agreed to amend our existing collaboration for the
commercialization and development of filgotinib. This resulted in the execution of the Transition
and Amendment Agreement of 3 April 2021 and the Second Amended and Restated license and
Collaboration Agreement of 24 December 2021, effective as of 1 January 2022.
In September 2021 we agreed together with Gilead to also take over the sponsorship of and
operational and financial responsibility for the ongoing DIVERSITY clinical study, evaluating
filgotinib in CD, and its long-term extension study. We intend to complete the transfer of the
DIVERSITY clinical study no later than 30 June 2022. From 1 April 2022, we will also be solely
responsible for all development costs for the DIVERSITY clinical study.
Gilead remains responsible for commercial activities outside of Europe.
These modifications to the collaboration with Gilead did not result in the creation of new
performance obligations, and only the performance obligation related to the development
activities for filgotinib has been reassessed.
We retain the following three performance obligations, of which the first one was satisfied
completely in 2019; (i) the transfer of an extended license on GLPG1690, (ii) the granting of
exclusive access to our drug discovery platform (i.e. the IP, technology, expertise and capabilities)
during the collaboration period and exclusive option rights on our current and future clinical
programs after Phase 2 (or, in certain circumstances, the first Phase 3 study) outside Europe and
(iii) an increased cost share from 20/80 to 50/50 to 100/0 (for certain agreed activities (Group A
activities, as defined below)) on the global development activities of filgotinib, until we complete
the remaining development activities.
We refer to the critical accounting judgments and key sources of estimation uncertainty section
(note 4) explaining critical judgments and estimates in applying accounting policies.
Terms of the collaboration
We will fund and lead all discovery and development autonomously until the end of Phase 2. After the
completion of a qualifying Phase 2 study (or, in certain circumstances, the first Phase 3 study), Gilead
will have the option to acquire a license to the compound outside Europe. If the option is exercised,
we and Gilead will co-develop the compound and share costs equally. Gilead will maintain option
rights to our programs through the 10-year term of the collaboration. This term can be extended
for up to an additional three years thereafter for those programs, if any, that have entered clinical
development prior to the end of the collaboration term. In addition, a final term extension can be
granted in certain circumstances. Development of GLPG1690 was discontinued in February 2021.
For GLPG1972, after the completion of the ongoing Phase 2b study in osteoarthritis, Gilead had
the option to pay a $250 million fee to license the compound in the United States but declined
to exercise its option in November 2020.
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For all other programs resulting from the collaboration, Gilead will make a $150 million opt-in
payment per program and will owe no subsequent milestones. We will receive tiered royalties
ranging from 20% – 24% on net sales of all our products licensed by Gilead in all countries
outside Europe as part of the agreement.
Revised filgotinib collaboration
Under the revised agreement of December 2020, we assume all development, manufacturing,
commercialization and certain other rights for filgotinib in Europe, providing the opportunity to
build a commercial presence on an accelerated timeline. The transfer is subject to applicable
local legal, regulatory and consultation requirements. Most activities have been transferred as
of 31 December 2021 and the parties intend to complete the transition by 31 December 2022.
Beginning on 1 January 2021, we bear the future development costs for certain studies (defined
as “Group A activities”), in lieu of the equal cost split contemplated by the previous agreement.
These studies initially included the DARWIN3, FINCH4, FILOSOPHY, and Phase 4 studies and
registries in RA, MANTA and MANTA-RAy, the PENGUIN1 and 2 and EQUATOR2 studies in PsA, the
SEALION1 and 2 studies in AS, the HUMBOLDT study in uveitis in addition to other clinical and
non-clinical expenses supporting these studies and support for any investigator sponsored trials
in non-IBD conditions and non-clinical costs on all current trials. The DIVERSITY study has been
added to the “Group A activities” in September 2021. The existing 50/50 global development
cost sharing arrangement will continue for the following studies (defined as “Group B activities”):
SELECTION and its long-term extension study (LTE) in UC, DIVERGENCE 1 and 2 and their
LTEs and support for Phase 4 studies and registries in Crohn’s disease, pediatric studies and
their LTEs in RA, UC and Crohn’s disease, and support for investigator sponsored trials in
IBD. All commercial economics on filgotinib in Europe will transfer to us as of 1 January 2022,
subject to payment of tiered royalties of 8% to 15% of net sales in Europe to Gilead, starting
in 2024. In addition, if the European Medicines Agency grants regulatory approval of filgotinib
for the treatment of CD based on data from the DIVERSITY trial, then royalties payable by us to
Gilead will be reduced by 30% across all filgotinib indications and will become 5.6% to 10.5%
of net sales in Europe. In connection with the amendments to the existing arrangement for
the commercialization and development of filgotinib, Gilead has agreed to irrevocably pay us
€160 million, which is split between a €110 million payment received in 2021 and a €50 million
payment to be received in 2022 and is subject to certain adjustments for higher than budgeted
development costs. Upon completion of the DIVERSITY study transfer in 2022, Gilead will make
a one-time payment of $15 million to us in consideration for assuming responsibility for the
DIVERSITY clinical study. In addition, we will no longer be eligible to receive any future milestone
payments relating to filgotinib in Europe. Other terms of the original license agreement remain
in effect, including the remaining $295 million in development and regulatory milestones, sales-
based milestone payments of up to $600 million and tiered royalties ranging from 20% – 30%
payable in territories outside Europe (whereas before it was applicable for all countries outside of
Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the United Kingdom).
In addition, we achieved two regulatory approval milestones in 2020 totaling $105 million. No
regulatory approval milestones were achieved during 2021.
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Terms of the equity investment
As part of the research and development collaboration of 2019 Gilead also entered into a
share subscription agreement with us. Gilead’s equity investment consisted of a subscription
for new Galapagos shares at a price of €140.59 per share, representing on 14 July 2019 a
20% premium to Galapagos’ 30-day, volume-weighted average price. This equity subscription
took place at closing of the transaction, on 23 August 2019 and increased Gilead’s stake in
Galapagos from approximately 12.3% to 22.04% of the then issued and outstanding shares in
Galapagos. In addition, the extraordinary general meeting of shareholders of 22 October 2019
approved the issuance of warrant A and initial warrant B allowing Gilead to further increase its
ownership of Galapagos to up to 29.9% of the company’s issued and outstanding shares. The
initial warrant B has a term of five years and an exercise price per share equal to the greater
of (i) 120% multiplied by the arithmetic mean of the 30-day daily volume weighted average
trading price of Galapagos’ shares as traded on Euronext Brussels and Euronext Amsterdam,
and (ii) €140.59. Subsequent warrant B is still subject to approval by an extraordinary general
meeting of shareholders. This extraordinary general meeting of shareholders shall take place
between 57 and 59 months after the closing of the subscription agreement (23 August 2019)
and this warrant will have substantially similar terms, including as to exercise price, to the initial
warrant B. The agreement also includes a 10-year standstill restricting Gilead’s ability to propose
a business combination with or acquisition of Galapagos or increase its stake in Galapagos
beyond 29.9% of the company’s issued and outstanding shares, subject to limited exceptions.
On 6 November 2019, Gilead exercised warrant A and increased its ownership in Galapagos to
25.10% of the then outstanding shares. Warrant A expired in October 2020. Gilead’s ownership
amounted to 25.49% at 31 December 2021.
3. Significant accounting policies
Our principal accounting policies are summarized below.
Basis of preparation and going concern assumption
The consolidated financial statements are prepared in accordance with the International
Financing Reporting Standards (IFRS), as adopted by the EU. The consolidated financial
statements provide a general overview of our activities and the results achieved. They give a
true and fair view of our financial position, our financial performance and cash flows, on a going
concern basis.
New standards and interpretations applicable for the annual
period beginning on 1 January 2020
New standards and interpretations applicable for the annual period beginning on 1 January 2020
did not have a material impact on our consolidated financial statements.
New standards and interpretations applicable for the annual
period beginning on 1 January 2021
New standards and interpretations applicable for the annual period beginning on 1 January 2021
did not have a material impact on our consolidated financial statements.
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Standards and interpretations published, but not yet
applicable for the annual period beginning on 1 January 2021
A number of new standards are effective for annual periods beginning on or after 1 January 2022
with earlier adoption permitted. However we have not early adopted new or amended standards
in preparing our consolidated financial statements. We are currently still assessing the impact of
these new accounting standards and amendments that are not yet effective but we expect no
standard to have a material impact on our financial statements in the period of initial application.
The following amendments are effective for the period beginning 1 January 2022:
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16
and IAS 41); and
References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the period beginning 1 January 2023:
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
Definition of Accounting Estimates (Amendments to IAS 8);
Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments
to IAS 12); and
IFRS 17 Insurance Contracts and Amendments to IFRS 17.
Consolidated reporting
The consolidated financial statements comprise the financial statements of Galapagos NV and
entities controlled by Galapagos NV. Control is achieved where Galapagos NV has the power
to direct the relevant activities of another entity so as to obtain benefits from its activities. The
results of subsidiaries are included in the income statement and statement of comprehensive
income from the effective date of acquisition up to the date when control ceases to exist.
Where necessary, adjustments are made to the financial statements of subsidiaries to ensure
consistency with our accounting policies. All
income and
expenses are eliminated when preparing the consolidated financial statements.
intra-group transactions, balances,
Intangible assets
Expenditure on research activities is recognized as an expense in the period in which it is
incurred.
An internally generated intangible asset arising from our development activities is recognized
only if all of the following conditions are met:
Technically feasible to complete the intangible asset so that it will be available for use or sale
We have the intention to complete the intangible assets and use or sell it
We have the ability to use or sell the intangible assets
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The intangible asset will generate probable future economic benefits, or indicate the
existence of a market
Adequate technical, financial and other resources to complete the development are available
We are able to measure reliably the expenditure attributable to the intangible asset during
its development.
(i) Internally generated intangible assets
The amount capitalized as internally generated intangible assets is the sum of the development
costs incurred as of the date that the asset meets the conditions described above. Because of
risks and uncertainties inherent to the regulatory authorizations and to the development process
itself, management estimates that the conditions for capitalization are not met until we obtain
regulatory approval from the competent authorities.
Currently we recognize all development costs as an expense in the period in which they are
incurred, even for approved products because they do not generate separately identifiable
incremental future economic benefits that can be reliably measured.
(ii) Licenses, patents & know-how
Acquired in-process research and development obtained through in-licensing agreements,
business combinations, collaboration agreements or separate acquisitions are capitalized as an
intangible asset provided that they are separately identifiable, controlled by us and expected
to provide economic benefits. As the probability criterion in IAS 38 is always considered to
be satisfied for separately acquired research and development assets, upfront and milestone
payments to third parties for products or compounds for which regulatory approval has not yet
been obtained are recognized as intangible assets. We consider such intangible assets as not
yet available for use until the moment that the underlying asset is approved and commercially
is approved for
launched. Amortization will commence when the underlying asset
commercialization and the asset will be amortized over its useful life.
Licenses, patents and know-how will be amortized over their useful life (generally between 5 and
20 years), using the straight-line method.
Intangible assets may also consist of upfront fees paid to third party institutions in exchange for
an option to negotiate a license to any of the third party’s rights in technology resulting from the
collaboration. The upfront fee paid in exchange for this option is capitalized as intangible asset
and amortized over the expected duration of the option.
In the event an asset has an indefinite life, this fact is disclosed along with the reasons for being
deemed to have an indefinite life. Intangible assets with an indefinite useful life and intangible
assets which are not yet available for use are tested for impairment annually, and whenever there
is an indication that the asset might be impaired.
(iii) Software
Acquired software is recognized at cost less accumulated amortization and any impairment loss.
Amortization is recognized so as to write off the cost of assets over their useful lives (generally
between 3 and 5 years), using the straight-line method.
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(iv) Contract costs
Contract costs are those costs we incur to obtain a contract with a customer that we would not
have incurred if the contract has not been obtained and are capitalized as intangible assets only
if they are expected to be recoverable. Capitalized contract costs are amortized on a systematic
basis that reflects the pattern of transfer of the related promised goods or services to the
customer. Costs that we would have incurred regardless of whether the contract is obtained or
those costs that are not directly related to obtaining a contract would not be capitalized.
Property, plant and equipment
Property, plant and equipment are recognized at cost less accumulated depreciation and any
impairment loss.
Depreciation of an asset begins when it is available for use, ie when it is in the location and
condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is recognized so as to write off the cost of assets over their useful lives, using the
straight-line method, on the following bases:
Installation & machinery: 3 – 15 years
Furniture, fixtures & vehicles: 4 – 10 years
Leasehold improvements are depreciated over 3 - 10 years, being the term of the lease, unless a
shorter useful life is expected.
The other tangible assets category mainly consists of assets under construction. Assets under
construction are not depreciated.
Any gain or loss incurred at the disposal of an asset is determined as the difference between the
sale proceeds and the carrying amount of the asset and is recognized in profit or loss.
Leases
All leases are accounted for by recognizing a right-of-use asset and a corresponding lease liability
except for:
Leases of low value assets; and
Leases with a duration of 12 months or less.
Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the lease payments that are not paid at the commencement
date, discounted using the rate implicit in the lease. If this rate cannot be readily determined,
we will apply the incremental borrowing rate. The lease payments can include fixed payments,
variable payments that depend on an index or rate known at the commencement date, expected
residual value guarantees, termination penalties and extension option payments or purchase
options if we are reasonably certain to exercise this option.
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After initial recognition, the lease liability is measured at amortized cost using the discount
rate determined at commencement and will be re-measured (with a corresponding adjustment
to the related right-of-use asset) when there is a change in future lease payments in case of
renegotiation, changes of an index or rate or in case of reassessment of options.
At the commencement date, the right-of-use assets are measured at cost, comprising the
amount of the initial lease liability, initial direct costs and the expected dismantling and removing
costs (when we incur an obligation for these costs), less any lease incentives received from the
lessors.
After initial recognition, the right-of-use assets are measured at cost and depreciated over the
shorter of the underlying asset’s useful life and the lease term on a straight-line basis. The right-
of-use assets will be adjusted for any re-measurements of the lease liability as a result of lease
modifications. The right-of-use assets are subject to impairment testing if there is an indicator for
impairment, as for property, plant and equipment. The right-of-use assets are presented in the
statement of financial position under the caption “Property, plant and equipment” and the lease
liabilities are presented as current and non-current lease liabilities.
In determining the lease term, we consider all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. We only include
in the lease term if the lease is
extension options (or periods after termination options)
reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant
event or a significant change in circumstances occurs which affects this assessment and that is
within our control.
Each lease payment is allocated between the liability and financial expenses. The finance cost is
charged to the income statement over the lease period so as to produce a constant periodic rate
of interest on the remaining balance of the liability for each period.
Inventories
Inventories consist of raw materials, semi-finished products and finished products purchased for
resale. These inventories are initially recognized at cost, and subsequently at the lower of cost
and net realizable value. Cost comprises all costs of purchase, including transportation costs, and
is determined using the FIFO-method.
Financial instruments
Financial assets and financial liabilities are recognized on our balance sheet when we become a
party to the contractual provisions of the instrument. We do not actively use currency derivatives
to hedge planned future cash flows, nor do we make use of forward foreign exchange contracts.
Additionally, we do not have financial debts at 31 December 2021.
(i) Financial assets
Financial assets are initially recognized either at fair value or at their transaction price. All
recognized financial assets are subsequently measured at either amortized cost or fair value
under IFRS 9 on the basis of both our business model for managing the financial assets and the
contractual cash flow characteristics of the financial asset.
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a financial asset that (i) is held within a business model whose objective is to collect the
contractual cash flows and (ii) has contractual cash flows that are solely payments of principal
and interest on the principal amount outstanding is measured at amortized cost (net of any
write down for impairment), unless the asset is designated at fair value through profit or loss
(FVTPL) under the fair value option;
a financial asset that (i) is held within a business model whose objective is achieved both by
collecting contractual cash flows and selling financial assets and (ii) has contractual terms that
give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding, is measured at fair value through other comprehensive
income (FVTOCI), unless the asset is designated at FVTPL under the fair value option;
all other financial assets are measured at FVTPL.
A financial asset is classified as current when the cash flows expected to flow from the instrument
mature within one year.
We derecognize a financial asset when the contractual rights to the cash flows from the asset
expire, or we transfer the rights to receive the contractual cash flows on the financial asset in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred.
We classify non-derivative financial assets into the following categories:
financial assets at fair value through profit or loss (equity instruments, current financial
investments and cash equivalents)
financial assets at amortized cost (receivables, current financial investments and cash and
cash equivalents).
(a) Financial assets at fair value through profit or loss
Financial assets are designated at fair value through profit or loss if we manage such investments
and make purchase and sale decisions based on their fair value in accordance with the
investment strategy. Attributable transaction costs are recognized in profit or loss as incurred.
Financial assets at fair value through profit or loss are measured at fair value, and changes
therein, which take into account any dividend income, are recognized in profit or loss.
Equity instruments
We hold investments in equity instruments, which based on IFRS 9, are designated as financial
assets at fair value through profit or loss. The fair value of listed investments is based upon the
closing price of such securities on Euronext at each reporting date. If there is no active market
for an equity instrument, we establish the fair value by using valuation techniques.
Current financial investments measured at fair value through profit or loss
Current financial investments include financial assets measured at fair value through profit or
loss and may comprise short term bond funds that have a maturity equal or less than 12 months,
and money market funds.
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Cash equivalents measured at fair value through profit or loss
Cash equivalents measured at fair value through profit or loss may comprise bonds and money
market funds that are readily convertible to cash and are subject to an insignificant risk of
changes in value.
(b) Financial assets at amortized cost
Receivables
Receivables are designated as financial assets measured at amortized cost. They are initially
measured either at fair value or at transaction price, in the absence of a significant financing
component.
All receivables are subsequently measured in the balance sheet at amortized cost, which
generally corresponds to nominal value less expected credit loss provision.
Receivables mainly comprise trade and other receivables and current/non-current R&D
incentives receivables.
The R&D incentives receivables relate to refunds resulting from R&D incentives on research and
development expenses in France and Belgium. Research and development incentives receivables
are discounted over the period until maturity date according to the appropriate discount rates.
Current financial investments measured at amortized cost
Current financial
investments measured at amortized cost include treasury bills that have a
maturity equal or less than 12 months. We apply settlement date accounting for the recognition
and de-recognition of current financial
investments measured at amortized cost. Current
financial
investments measured at amortized cost also include short-term deposits with
maturities exceeding three months from the acquisition date.
Cash and cash equivalents measured at amortized cost
Cash and cash equivalents measured at amortized cost mainly comprise of notice accounts and
short-term deposits that are readily convertible to cash within three months or less and and that
are subject to an insignificant risk of changes in their value .
Cash and cash equivalents exclude restricted cash, which is presented in the line other non-
current assets in the statement of financial position.
(ii) Financial liabilities
Financial
Subsequent to initial recognition, financial liabilities are measured at amortized cost.
liabilities are initially measured either at fair value or at their transaction price.
Financial liabilities mainly comprise trade and other liabilities.
Trade and other liabilities are comprised of liabilities that are due less than one year from the
balance sheet date and are in general not interest bearing and settled on an ongoing basis during
the financial year. They also include accrued expense related to our research and development
project costs.
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We derecognize a financial liability when our contractual obligations are discharged, cancelled or
expire.
(iii) Financial instruments: derivative assets/liabilities
Financial assets and financial liabilities are recognized on our balance sheet when we become a
party to the contractual provisions of the instrument.
Derivative assets and liabilities are initially measured at fair value. After initial measurement we
will measure the derivatives at fair value through profit or loss.
Taxation
Income tax in the profit or loss accounts represents the sum of the current tax and deferred tax.
Current tax is the expected tax payable on the taxable profit of the year. The taxable profit of the
year differs from the profit as reported in the financial statements as it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that are
never taxable or deductible. Our liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the balance sheet date.
Deferred income tax is provided in full, using the liability-method, on temporary differences
arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. However, the deferred income tax is not accounted for if it arises from the initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects neither accounting nor taxable profit nor loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax
assets are recognized to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilized. As such, a deferred tax asset for the
carry forward of unused tax losses will be recognized to the extent that is probable that future
taxable profits will be available.
Foreign currencies
Functional and presentation currency
Items included in the financial statements of each of our entities are valued using the
currency of
in which the entity operates. The
consolidated financial statements are presented in Euros, which is our presentation
currency.
the primary economic environment
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Transactions and balances in foreign currency
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of transaction. Foreign currency gains and losses resulting from
the settlement of such transactions and from the translation at closing rates of monetary
assets and liabilities denominated in foreign currencies are recognized in the financial result
in the income statement.
Non-monetary assets and liabilities measured at historical cost that are denominated in
foreign currencies are translated using the exchange rate at the date of the transaction.
Financial statements of foreign group companies
The results and financial position of all our entities that have a functional currency different
from Euro are translated as follows:
Assets and liabilities for each balance sheet presented are translated at the closing rate
at the date of that balance sheet
Income and expenses for each income statement are translated at average exchange
rates
All resulting cumulative exchange differences are recognized as a separate component
of equity
Such cumulative exchange differences are recognized in profit or loss in the period in
which the foreign operation is disposed of.
Recognition of expenses linked to clinical trial milestones
We recognize expenses specifically linked to clinical trial milestones with regard to patient
recruitment and patient treatment (i.e. completion), incurred in carrying out clinical trials, in line
with actual patient recruitment or treatment at each period end, in reference to the milestone
targets for patient recruitment or treatment.
This involves the calculation of clinical trial accruals at each period end, for which an estimation
of the expected full clinical trial milestone cost is required, as well as the current stage of patient
recruitment or treatment.
Clinical trials usually take place over extended time periods and typically involve a set-up phase,
a recruitment phase and a completion phase which ends upon the receipt of a final report
containing full statistical analysis of trial results. Accruals for patient recruitment and patient
completion are prepared separately for each clinical trial in progress and take into consideration
the stage of completion of each trial including the number of patients that have entered the trial
and the number of patients that have been treated in the trial. In all cases, the full cost of each
trial is expensed by the time the final report is received.
Revenue recognition
Revenues to date have consisted principally of collaboration revenues, which consist of
milestones, license fees, non-refundable upfront fees and royalties received in connection with
collaboration and license agreements. Starting in 2021 we also have commercial revenues from
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the sales of Jyseleca, which are reported as “Product net sales” in our consolidated income
statement. We also generated revenue from our fee-for-service activities, which is reported as
discontinued operations per 31 December 2020.
The revenue recognition policies can be summarized as follows:
We recognize revenue when our customer obtains control of promised goods or services, in an
amount that reflects the consideration that we expect to receive in exchange for those goods
or services. To determine revenue recognition for agreements that we determine are within the
scope of IFRS 15, we perform the following five steps:
Collaboration revenues
(i) identify the contract
In our current agreements with customers we are mainly transferring licenses on our IP and
in some cases this is combined with access rights and/or providing research and development
services and/or cost sharing mechanisms. In some cases our collaborations also include an
equity subscription component. If this is the case, we analyze if the criteria to combine contracts,
as set out by IFRS 15, are met.
(ii) identify the performance obligations in the contract
Depending on the type of the agreement, there can be one or more distinct performance
obligations under IFRS 15. This is based on an assessment of whether the promises in an
agreement are capable of being distinct and are distinct from the other promises to transfer
goods and/or services in the context of the contract. For some of our agreements we combine
the transfer of the license with the performance of research and development activities because
we consider that the license is not capable of being distinct and is not distinct in the context of
the contract.
(iii) determine the transaction price
Collaboration and license agreements with our commercial partners for research and
development activities generally include non-refundable upfront fees; milestone payments, the
receipt of which is dependent upon the achievement of certain clinical, regulatory or commercial
milestones; license fees, royalties on sales and sometimes reimbursement income or profits
sharing arrangements.
(a) License fees or upfront payments
If the license to our intellectual property is determined to be distinct from the other performance
obligations identified in the arrangement, we recognize revenues from non-refundable upfront
fees allocated to the license at the point in time the license is transferred to the customer and
the customer has the right to use the license.
For licenses that are bundled with other promises, we utilize judgment to assess the nature of the
combined performance obligation to determine whether the combined performance obligation
is satisfied over time or at a point in time. If the performance obligation is satisfied over time,
revenue is recognized based on a pattern that best reflects the transfer of control of the service
to the customer.
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(b) Milestone payments other than sales based milestones
A milestone payment is only included in the transaction price to the extent that it is highly probable
that a significant reversal in the amount of cumulative revenue recognized will not occur when the
uncertainty associated with the variable consideration is subsequently resolved. Where milestone
payments are included in the transaction price we estimate the amount to be included in the
transaction price using the most likely amount method. The transaction price is allocated to each
performance obligation on a stand-alone selling price basis. We recognize revenue as or when the
performance obligations under the contract are satisfied. At the end of each subsequent reporting
period, we re-evaluate the probability of achievement of relevant milestones and any related
constraint. If necessary we adjust our estimate of the overall transaction price. Any such adjustments
are recorded on a cumulative catch-up basis, which would affect revenue and earnings in the period
of adjustment.
(c) Reimbursement income for R&D services
Collaboration and license agreements may include reimbursement or cost sharing for research
and development services: such as outsourcing costs and payment for full-time equivalents at
contractual rates. R&D services are performed and satisfied over time given that the customer
simultaneously receives and consumes the benefits provided by us.
Such costs reimbursements received are recognized in revenues when costs are incurred and agreed
by the parties when we are acting as a principal in the scope of our stake of the R&D activities. If the
later condition is not fulfilled, costs reimbursements are accounted for as a decrease of the related
expenses.
(d) Sales based milestone payments and royalties
License and collaboration agreements include sales-based royalties, including commercial milestone
payments based on the level of sales, and the license has been deemed to be the predominant item
to which the royalties relate. Related revenue is recognized as the subsequent underlying sales occur.
(iv) allocate the transaction price to the performance obligations in the contract
We allocate the transaction price to each performance obligation identified in the contract based
upon stand-alone selling price. The stand-alone selling price of each performance obligation is
estimated by using one of the following methods: adjusted market assessment approach, the
expected cost plus a margin approach or the residual approach. If management assesses that there
is only one single performance obligation, the entire transaction price would be allocated to this
performance obligation.
(v) recognize revenue when (or as) the entity satisfies a performance obligation
Revenue is recognized when our customer obtains control of the goods and/or services foreseen
in the contracts. The control can be transferred over time or at a point in time – which results in
recognition of revenue over time or at a point in time.
In case of revenue recognition over time, we use either an input model that considers estimates
of the percentage of total research and development costs that are completed each period
compared to the total estimated costs (percentage of completion method) or we apply an output
method to measure the progress of the satisfaction of the underlying performance obligation. In
other cases, depending on specific circumstances, we recognize revenue on a straight-line basis
over the estimated term of the performance obligation.
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Product net sales
Revenue on the sale of Jyseleca is recorded as “Product net sales” in our consolidated income
statement.
Product net sales is the net amount of revenue recognized resulting from transferring control
over our products to our customer (for example wholesalers and hospitals). Product sales
revenue is recognized at a point in time when control of the goods has transferred to the
customer. This is generally when the goods are delivered to the customer depending on the
specific incoterms in the contract with a customer.
The amount of revenue recognized is the amount allocated to the satisfied performance
obligation taking into account variable consideration. The estimated amount of variable
consideration is included in the transaction price only to the extent that it is highly probable
that a significant reversal in the amount of cumulative revenue recognized will not occur when
the uncertainty associated with the variable consideration is subsequently resolved. Variable
consideration that is included in the transaction price is primarily composed of rebates,
discounts, cash discounts and chargebacks granted to various customers that are part of
commercial and governmental contractual arrangements or other reimbursement programs.
Shelf stock adjustments are granted to some of our customers to cover the inventory held by
them at the time of a price decrease becomes effective. A liability is recognized for expected
rebates, cash discounts, chargebacks or other reimbursements payable directly or indirectly to
customers in relation to sales made until the end of the reporting period.
The amount of variable consideration is estimated using several elements such as third-party
market data, product pricing, the specific terms in the individual agreements, estimated inventory
levels and the shelf life of our product. If actual results differ, these estimates will be adjusted.
Net sales are presented net of value added tax and other sales related taxes.
We refer to note 6 for detailed information per agreement and to our Critical accounting
judgments and key sources of estimation uncertainty for more information.
Cost of sales
Our cost of sales includes primarily the purchase cost of the goods sold and transportation costs.
Other operating income
Grants and R&D incentives
As we carry out extensive research and development activities, we benefit from various grants
and R&D incentives from certain governmental agencies. These grants and R&D incentives
generally aim to partly reimburse (approved) expenditures incurred in our research and
development efforts and are credited to the income statement, under other income, when the
relevant expenditure has been incurred and there is reasonable assurance that the grants or
R&D incentives are receivable.
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Equity instruments
Equity instruments issued by us are measured by the fair value of the proceeds received, net of
direct issue costs.
Employee benefits
(i) Defined contribution plans
Contributions to defined contribution pension plans are recognized as an expense in the income
statement as incurred.
(ii) Defined benefit plans
For defined retirement benefit plans, the cost of providing benefits is determined using the
projected unit credit method, with actuarial valuations being carried out at the end of each
annual reporting period. Re-measurement, comprising actuarial gains and losses, the effect of
the changes to the asset ceiling (if applicable) and the return on plan assets (excluding interest),
is reflected immediately in the statement of financial position with a charge or credit recognized
in other comprehensive income in the period in which they occur. Re-measurement recognized
in other comprehensive income is reflected immediately in retained earnings and will not be
reclassified to profit or loss. Past service cost is recognized in profit or loss in the period of a
plan amendment. Net interest is calculated by applying the discount rate at the beginning of the
period to the net defined benefit liability or asset.
Defined benefit costs are categorized as follows:
Service cost (including current service cost, past service cost, as well as gains and losses on
curtailments and settlements)
Net interest expenses or income
Re-measurement
The retirement benefit obligation recognized in the consolidated statement of financial position
represents the actual deficit or surplus in our defined benefit plans. Any surplus resulting from
this calculation is limited to the present value of any economic benefits available in the form
of refunds from the plans or a reduction in future contributions to the plans. A liability for a
termination benefit is recognized at the earlier of when we can no longer withdraw the offer of
the termination benefit and when we recognize any related restructuring costs.
(iii) Staff bonus plan
We recognize an expense in the income statement for staff bonus plans.
(iv) Management bonus plan
(a) Bonuses which were granted for performance years until 2018
The management board members, together with other senior managers, are eligible to receive
bonuses under the Senior Management Bonus Scheme established in 2006. Pursuant to the
rules of the Senior Management Bonus Scheme, 50% of the bonus is paid immediately around
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year-end and the payment of the remaining 50% is deferred for three years. The deferred 50%
component is dependent on the Galapagos share price change relative to the Next Biotech
Index (which tracks Euronext-listed biotech companies). The Galapagos share price and the Next
Biotech Index at the start and end of the 3‑year period is calculated by the average price over the
preceding and last month of the 3‑year period, respectively.
If the Galapagos share price change is better than or equal to the change in the Next Biotech
Index, the deferred bonus will be adjusted by the share price increase/decrease percentage
and paid out
If the Galapagos share price change is up to 10% worse than the change in the Next Biotech
Index, 50% of the deferred bonus will be adjusted by the share price increase/decrease
percentage and paid out, and the remainder will be forfeited
If the Galapagos share price change is more than 10% worse than the change in the Next
Biotech Index the deferred bonus will be forfeited
We recognize the possible payment of the deferred component of the Senior Management
Bonus Scheme within three years at the moment that the bonus amount is determined, based
on the fair value of the liability at each reporting period. The fair value of the liability is measured
by use of the Monte Carlo valuation model taking into consideration (a) the average reference
price of the Galapagos share and Next Biotech Index, (b) the average price of the reporting period
of the Galapagos share and the Next Biotech Index, (c) the simulation of the evolution of the
Galapagos share price and the Next Biotech Index based on their volatility and correlation until
maturity of the bonus, (d) the applicable discount rates at the end of the reporting period and
(e) the probability of the number of beneficiaries assumed to stay with us until maturity of the
bonus. The changes in fair value are recognized in profit or loss for the period.
(b) Bonuses which were granted for performance year 2019 and beyond
The management board members, together with other senior managers are eligible to receive a
bonus based on achievement of personal and corporate objectives. This bonus is paid in cash.
Share-based payments
(i) Equity-settled share-based payments
We grant equity-settled incentives to certain employees, members of the supervisory board and
consultants in the form of subscription rights. Equity-settled subscription rights are measured
at fair value at the date of acceptance. The fair value determined at the acceptance date of
the subscription rights is expensed over time until the end of the vesting period, based on our
estimate of subscription rights that are expected to be exercised. Fair value is measured by use
of the Black & Scholes model. The expected life used in the model has been adjusted, based
on management’s best estimate, for the effects of non-transferability, exercise restrictions, and
behavioral considerations.
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(ii) Long-term incentive plans in RSUs (Restricted Stock Units)
Management board members and other employees are granted RSUs. An RSU is a grant that
takes the form of a promise that employees will receive Galapagos stock in the future and it will
be payable, at the company’s discretion in cash or in shares, upon completion of a certain vesting
period. Each RSU reflects the value of one Galapagos share.
The RSUs are measured based on the volume weighted average share price over the 30-calendar
day period preceding the measurement date. We recognize the corresponding expense and
liability over the vesting period. The fair value of the liability is re-measured at each reporting date
because currently it is management’s intention to settle the RSUs in cash.
Provisions
Provisions are recognized on the balance sheet when we have a present obligation as a result
of a past event; when it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligations and a reliable estimate can be made of the amount of
the obligations. The amount recognized as a provision is the best estimate of the expenditure
required to settle the present obligation at the balance sheet date. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of the money and, when appropriate, the
risk specific to the liability.
Impairment
(i) Financial assets
The impairment loss of a financial asset measured at amortized cost is calculated based on the
expected loss model.
For trade receivables, in the absence of a significant financing component, the loss allowance
is measured at an amount equal to lifetime expected credit losses. Those are the expected
credit losses that result from all possible default events over the expected life of those trade
receivables.
Impairment losses are recognized in the consolidated income statement.
(ii) Property, plant and equipment and intangible assets
For intangible assets with an indefinite life or intangible assets not available for use yet, we
perform an impairment test at least on an annual basis. Furthermore we review at each balance
sheet date the carrying amount of our tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where the asset does not generate cash flows that are independent
from other assets, we estimate the recoverable amount of the cash-generating unit to which the
asset belongs. If the recoverable amount of an asset or cash generating unit is estimated to be
less than the carrying amount, the carrying amount of the asset is reduced to its recoverable
amount. An impairment loss is recognized as an expense immediately.
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When an impairment loss subsequently reverses, the carrying amount of the asset is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined, had no impairment loss been
recognized for the asset in prior years. A reversal of an impairment loss resulting from a sale
of a subsidiary is recognized as income. In other cases impairment losses of goodwill are never
reversed.
Net income/loss per share
Basic net income/loss per share is computed based on the weighted average number of shares
outstanding during the period. Diluted net income per share is computed based on the weighted
average number of shares outstanding including the dilutive effect of subscription rights, if any.
Segment reporting
We currently have one operating and reportable segment. Prior to the disposal of our fee-for-
service business Fidelta our reportable segments were R&D and fee-for-service business. Fidelta
is reported as discontinued operations at 31 December 2020 and at 31 December 2021.
Assets held for sale and discontinued operations
A discontinued operation is a component of an entity that either has been disposed of, or
that is classified as held for sale. It must either: represent a major separate line of business or
geographical area of operations; be part of a single coordinated disposal plan; or be a subsidiary
acquired exclusively with a view to resale.
Intercompany transactions between continuing and discontinued operations are eliminated
against discontinuing operations.
Non-current assets and disposal groups are classified as assets held for sale if their carrying
amount is to be recovered principally through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly probable and the asset (or
disposal group) is available for immediate sale in its present condition.
They are stated at the lower of carrying amount and fair value less costs to sell with any resulting
impairment recognized. Assets related to discontinued operations and assets of disposal group
held for sale are not depreciated.
On 4 January 2021 we sold of our fee-for-service business Fidelta. We classified the assets and
the associated liabilities of Fidelta as held for sale in our financial statements for the year ended
31 December 2020.
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4. Critical accounting judgments and key sources of
estimation uncertainty
In the application of the accounting policies, we are required to make judgments, estimates and
assumptions about the carrying amounts of assets and liabilities that are not readily apparent
from other sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from
these estimates.
Our estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only
that period or in the period of the revisions and future periods if the revision affects both current
and future periods.
The following are the critical
judgments that we have made in the process of applying the
accounting policies and the key sources of estimation uncertainty that have the most significant
effect on the amounts recognized in the consolidated financial statements presented elsewhere
in this annual report.
Critical judgments in applying accounting policies
IFRS 15 – Revenue recognition Gilead
Our critical judgments were as follows:
Identification of the contract
Despite our obligation to pay future sales-based royalties to Gilead and a change in the
governance structure for the development activities, management judged that all activities
are still beneficial for the further development of filgotinib, for which Gilead still owns the ex-
Europe rights. All contract modifications have thus been analyzed following the requirements
of IFRS 15 as we concluded that Gilead is still to be considered as a customer. This is also
supported by the fact that we concluded that there continues to be only one performance
obligation with respect to filgotinib.
Identification of the performance obligation
The modifications of 2020 and 2021 did not give rise to new performance obligations. There
was only a change in scope and price of the existing filgotinib performance obligation, which
was only partly satisfied at the time of the modification. It is management’s judgement that
the Group A and Group B development activities (see note 2 for more details) still to be
performed are interrelated and thus cannot be seen as separate performance obligations.
Based on this, the contract modification has been treated on a cumulative catch-up basis
under IFRS 15.
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Allocation of the total transaction price
The increased fixed consideration as result of the modifications has been allocated in its
entirety to the filgotinib performance obligation. We assessed that the contract modification
only changes the scope of the filgotinib performance obligation and the change in both
fixed and variable consideration is reflective of the updated stand-alone selling price for
the remaining activities of this performance obligation. If we would have concluded that
the increased consideration was not, or only partially, related to the filgotinib performance
obligation, the consideration would have been potentially allocated to other performance
obligations in the contract, which would alter the timing of revenue recognition.
The denominator used in the calculation of the percentage of completion reflects our best
estimate of the total costs to complete the filgotinib performance obligation. These costs
were assessed considering management’s best estimate of the design and duration of
ongoing and planned clinical trials
Key sources of estimation uncertainty
The following are the key sources of estimation uncertainty that have the most significant
effect on the amounts recognized in our consolidated financial statements for the year ended
31 December 2021.
Costs to complete the filgotinib performance obligation
The denominator used in the calculation of the percentage of completion reflects our best
estimate of the total costs to complete the filgotinib performance obligation (which is
composed of the actual costs already incurred at reporting date and our best estimate of
the remaining costs to complete the performance obligation). As our estimate of the costs
is depending on the evolution of the development activities, it may be subject to change
in the future. If the outcome of certain activities would be different from the assumptions
that we made, it could lead to a material adjustment to the total estimated costs, resulting
in a reallocation of revenue between current and future periods. Revenue recognized for
upfront payments and milestone payments in 2021 amounted to €235.7 million. Our total
deferred income balance related to this filgotinib performance obligation amounts to €604.9
million on 31 December 2021. At reporting date, had our best estimate of the remaining
cost to complete the filgotinib performance obligation been increased by 5%, this would have
resulted in a decrease in revenue recognition in 2021 of €16.7 million and a corresponding
increase in current and non-current deferred income. Had our best estimate of the
remaining cost to complete the filgotinib performance obligation been decreased by 5%, this
would have resulted in an increase in revenue recognition in 2021 of €17.5 million and a
corresponding decrease in current and non-current deferred income.
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5. Segment information
Geographical information
In 2021 our continuing operations were mainly located in Belgium, France, the Netherlands,
Germany,
Italy, Spain, Switzerland and the United Kingdom and the revenues from our
collaboration partner Gilead represented almost 100% of the collaboration revenues.
Following table summarizes our collaboration revenues by destination of customer:
(thousands of €)
United States of America
Europe
Total collaboration revenues
Year ended 31 December,
2021
2020
467,978
472,445
2,114
5,605
470,093
478,051
Following table summarizes our collaboration revenues by major customers:
Year ended 31 December,
2021
2020
(thousands of €)
% (thousands of €)
%
Gilead
United States of America
467,978
100%
472,445
99%
Europe
Novartis
Europe
2,071
0%
1,460
0%
-
0%
4,125
1%
Total collaboration revenues from
major customers
470,049
100%
478,030
100%
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On 31 December 2021, we held €198 million (€171 million in 2020) of property, plant and
equipment and intangible assets distributed as follows:
(thousands of €)
Belgium
France
The Netherlands
Switzerland
Spain
Other
Total
31 December
2021
98,295
21,051
66,621
7,181
3,029
1,438
2020
113,524
18,398
28,210
7,668
2,755
388
197,615
170,943
6. Total net revenues
Product net sales
We reported net sales of Jyseleca for the year ended 31 December 2021 of €14.8 million, which
reflects the net sales booked by Galapagos after the transition from Gilead. Our counterparties
for the sales of Jyseleca during 2021 were hospitals and wholesalers located in Belgium, the
Netherlands, France, Italy, Spain and Germany.
Net sales exclusively consisted of sales of Jyseleca.
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Collaboration revenues
The following table summarizes our collaboration revenues for the years ended 31 December
2021 and 2020 by collaboration and by category of revenue: upfront payments and license fees,
milestone payments, reimbursement income, and royalties.
(thousands of €)
Over time
time
2021
2020
Year ended 31 December
Point in
Recognition of non-refundable upfront
payments and license fees
Gilead collaboration agreement for
filgotinib
Gilead collaboration agreement for drug
discovery platform
433,884
411,417
203,301
181,816
230,582
229,601
Milestone payments
32,408
46,261
Gilead collaboration agreement for
filgotinib
32,408
46,261
Reimbursement income
Novartis collaboration agreement for
MOR106
AbbVie collaboration agreement for CF
Royalties
Gilead royalties on Jyseleca
Other royalties
-
-
-
3,801
3,757
43
4,073
4,125
(52)
16,299
16,227
72
Total collaboration revenues
470,093
478,051
Recognition of non-refundable upfront payments, license fees and milestone payments related
to the filgotinib agreement amounted to €235.7 million in 2021. We recognize the consideration
from Gilead allocated to the drug discovery platform on a linear basis over 10 years, of which
we recognized €230.6 million in 2021. Additionally, for the year ended 31 December 2021, we
recognized in revenue €3.8 million of royalties from Gilead on filgotinib.
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The below table summarizes the transaction price of our collaboration with Gilead:
Diversity
Other
amendment
31 December
movements
(6 September
31 December
2020
in 2021
2021)
2021
(thousands of €)
Upfront consideration
Milestones achieved
4,005,373
194,363
Royalties
16,227
3,757
Impact initial valuation of share subscription
agreement
124,604
12,643
4,018,016
194,363
19,984
124,604
4,340,567
3,757
12,643
4,356,967
Less:
Warrant issuance liabilities
Warrant A
Initial warrant B
Subsequent warrant B
Allocation to performance obligations
Ziritaxestat
Filgotinib(1)
(43,311)
(2,545)
(7,859)
4,286,852
666,967
1,326,814
Drug discovery platform (10 years)
2,293,072
(43,311)
(2,545)
(2,442)
12,643
4,308,669
666,967
12,643
1,343,214
2,298,489
5,417
9,174
3,757
5,417
(1) With regard to the additional consideration received as a result of the Option, License and Collaboration
agreement (14 July 2019) allocated to the filgotinib performance obligation, we assumed the existence of a
significant financing component estimated to €44.5 million as of 31 December 2019 reflecting the time value of
money on the estimated recognition period. This financing component was reassessed to €55.3 million as of 31
December 2020, and to €57.3 million on 31 December 2021.
A summary of our main contracts with customers is given below:
Collaboration with Gilead
We refer to note 2 of this financial report for a general description of our collaboration with Gilead.
We retain the following three performance obligations, of which the first one was satisfied completely
in 2019; (i) the transfer of an extended license on GLPG1690, (ii) the granting of exclusive access to
our drug discovery platform (i.e. the IP, technology, expertise and capabilities) during the collaboration
period and exclusive option rights on our current and future clinical programs after Phase 2 (or, in
certain circumstances, the first Phase 3 study) outside Europe and (iii) an increased cost share from
20/80 to 50/50 to 100/0 (for Group A activities only) on the global development activities of filgotinib,
until we complete the remaining development activities (Group A and Group B activities).
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We concluded as follows:
Determination of the total transaction price
We assessed that the contract modifications of 15 December 2020 and 6 September 2021
only change the scope of the filgotinib performance obligation and the changes in both
fixed and variable consideration are reflective of the updated stand-alone selling price for
the remaining activities of this performance obligation. As a result of these modifications,
there were increases in the transaction price of €160.0 million and $15.0 million, respectively,
which have been allocated in their entirety to the filgotinib performance obligation.
Financing component
Management has considered it is appropriate to adjust the part of the transaction price
that was allocated to the filgotinib performance obligation, for the time value of money. The
additional consideration as a result of the contract modification of 15 December 2020 has
also been adjusted for the time value of money.
License on GLPG1690
This performance obligation is completely satisfied at 31 December 2019. Following the
discontinuation of the ziritaxestat trials, we do not expect future milestone payments or
royalties.
After granting the license for GLPG1690, we shared Phase 3 costs equally with Gilead.
Any cost reimbursement from Gilead was not recognized as revenue but accounted as a
decrease of the related expenses.
Filgotinib amendment
There is one single performance obligation under IFRS 15: the transfer of a license combined
with performance of R&D activities. This is because we considered that the license is not
distinct in the context of the contract.
The transaction price is currently composed of a fixed part, being non-refundable upfront
and license fees and a variable part, being milestone payments, sales based milestones
and sales based royalties, and cost reimbursements for R&D activities delivered. Milestone
payments are included in the transaction price of the arrangement to the extent that it is
highly probable that a significant reversal of revenue will not occur. Milestone payments
received from Gilead are recognized in revenue over time till the end of the development
plan. Sales based milestones and sales based royalties are also part of the arrangement and
are recognized as revenues at a point in time at the moment they occur. During 2020 and
2021 we reported respectively €16.2 million and €3.8 million of revenues from royalties from
Gilead.
Revenues, excluding sales based milestones and sales based royalties, are recognized over
time through satisfaction of the performance obligation. The “cost-to-cost” input model is
applied to measure the progress of the satisfaction of this performance obligation. The
estimated costs to complete the performance obligation have been reassessed as a result of
the contract modifications from 2020 and 2021.
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Access rights to the drug discovery platform, option rights and R&D
activities
The revenue allocated to the drug discovery platform is recognized over time as Gilead
receives exclusive access to our drug discovery platform and option rights on our current
and future pipeline as well as R&D activities during the collaboration term. Management
concluded that an equal spread over the collaboration period is the most reliable and
appropriate recognition method.
At inception of the collaboration (July 2019) we assessed the appropriate period over which
to recognize the drug discovery platform revenue to be 10 years. This is because we granted
exclusive rights over a 10-year period. However, if at the end of the 10-year period, some
programs in existence as of this time would have reached the clinic (i.e. IND filed with
regulatory authorities), the rights for those specific programs may be extended, for a
maximum of three years. This critical estimate is reassessed at each year-end based on the
evolution of our pipeline and is still valid per 31 December 2021.
7. Operating costs and other operating income
Operating costs
Research and development expenditure
The following table summarizes research and development expenditure for the years ended
31 December 2021 and 2020.
(thousands of €)
Personnel costs
Subcontracting
Year ended 31 December
2021
2020
(165,239)
(161,509)
(251,085)
(301,841)
Disposables and lab fees and premises costs
(24,025)
(22,349)
Depreciation and impairment
Professional fees
Other operating expenses
(17,518)
(11,707)
(15,862)
(12,692)
(17,978)
(13,570)
Total research and development expenditure
(491,707)
(523,667)
The decrease in our R&D expenditure was principally due to reduced subcontracting costs
primarily due to the winding down of the programs with ziritaxestat (IPF), MOR106 (atopic
dermatitis) and GLPG1972 (OA) and to reduced spend on our other programs. This was partly
offset by costs increases for our filgotinib, Toledo (SIKi) and TYK2 programs, on a yearly
comparison basis.
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FINANCIAL STATEMENTS
This decrease was partly offset by:
A slight increase in personnel costs explained by an increase in salaries driven by higher
average number of FTEs on a yearly comparison basis, mainly driven by an increase in our
Medical Affairs staff. This increase was partly offset by decreased costs of the subscription
right plans and by a reassessment of the defined benefit accounting of our employee benefit
plans under IFRS.
Impairment of capitalized in-licensing fees, and increase in professional
fees due to
additional consulting expenses related to the implementation of new R&D software
applications.
Increase in other operating expenses, mainly software and license expenses.
The table below summarizes our research and development expenditure for the years ended
31 December 2021 and 2020, broken down by program:
(thousands of €)
Filgotinib program
Ziritaxestat program
OA program on GLPG1972
Toledo program
TYK2 program on GLPG3667
AtD program on MOR106
Other programs
Year ended 31 December
2021
2020
(171,204)
(126,879)
(26,725)
(55,902)
(2,285)
(22,966)
(91,957)
(87,107)
(27,141)
(20,199)
(112)
(7,618)
(172,284)
(202,996)
Total research and development expenditure
(491,707)
(523,667)
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FINANCIAL STATEMENTS
Sales and marketing expenses
The following table summarizes the sales and marketing expenses for the years ended
31 December 2021 and 2020.
(thousands of €)
Personnel costs
Depreciation
External outsourcing costs
Sales and marketing expenses recharged to Gilead
Professional fees
Other operating expenses
Year ended 31 December
2021
2020
(59,102)
(31,727)
(504)
(140)
(62,321)
(31,885)
59,699
(532)
(7,196)
4,711
(3,420)
(4,007)
Total sales and marketing expenses
(69,956)
(61,757)
The increase in our sales and marketing expenses for the year ended 31 December 2021, is due
to the commercial launch of filgotinib in Europe.
Personnel costs increased explained by an increase in the commercial work force from 99
average FTEs in 2020 to 248 average FTEs in 2021. External outsourcing costs increased primarily
explained by increased costs for marketing campaigns and information, market research and
promotional expenses. This was partially offset by additional cost recharged by us to Gilead in
the scope of our co-commercialization cost sharing for filgotinib in Belgium, the Netherlands,
Luxembourg, France, Italy, Spain, Germany and Great Britain, for which we have recharged
€59.7 million to Gilead in 2021 (compared to €4.7 million recharges for the year ended
31 December 2020). This was due to the shift of commercial activities from Gilead to us in the
course of 2021.
As from 1 January 2022, the 50/50 filgotinib co-commercialization cost sharing agreement with
Gilead will come to its end and we will therefore bear all commercialization costs for Europe.
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FINANCIAL STATEMENTS
General and administrative expenses
The following table summarizes the general and administrative expenses for the years ended
31 December 2021 and 2020.
(thousands of €)
Personnel costs
Depreciation and impairment
Legal and professional fees
Other operating expenses
Year ended 31 December
2021
2020
(71,190)
(70,110)
(16,621)
(5,147)
(26,072)
(25,592)
(27,016)
(17,908)
Total general and administrative expenses
(140,899)
(118,757)
The increase in our general and administrative expenses in 2021 was mainly due to an
exceptional impairment cost of €9.3 million on other tangible fixed assets following our decision
to reassess the construction project of our new future headquarter location in Mechelen
(Belgium), as well as higher costs for our insurance programs (an increase of €4.0 million
compared to 2020) and the newly applicable tax on securities accounts in 2021 in Belgium for an
amount of €4.3 million, both reported as other operating expenses. The Belgian tax on securities
accounts is an annual tax of 0.15% which is levied on securities accounts of which the average
value calculated according to certain principles would exceed €1.0 million.
Other operating income
The following table summarizes other operating income for the years ended 31 December 2021
and 2020.
(thousands of €)
Grant income
R&D incentives
Other
Year ended 31 December
2021
7,334
44,888
1,526
2020
5,452
45,951
804
Total other operating income
53,749
52,207
The grant income in 2021 was fully related to grants from a Flemish agency and the Belgian
government. In many cases these grant agreements carry clauses which require us to maintain a
presence in the same region for a number of years and invest according to pre-agreed budgets.
Grant income in 2021 included a grant of €5.4 million from the National Institute for Health and
Disability Insurance (2020: €5.0 million). This grant aims to incentivize innovative Belgian biotech
companies who are performing research and development activities in order to identify new
medicines.
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FINANCIAL STATEMENTS
R&D incentives income was primarily composed of:
Income from an innovation incentive system of the French government, which represented
€12.4 million of other operating income for the year ended 31 December 2021 compared to
€12.4 million for the year ended 31 December 2020
Income from Belgian R&D incentives with regard to incurred R&D expenses, which
represented €20.9 million of other operating income for the year ended 31 December 2021
compared to €21.7 million for the year ended 31 December 2020
Tax rebates on payroll withholding taxes of R&D personnel in Belgium and the Netherlands,
representing €11.7 million of other operating income for the year ended 31 December 2021
compared to €11.9 million for the year ended 31 December 2020.
8. Staff costs
The table below summarizes the number of our employees of our continuing operations on
31 December 2021 and 2020:
Number of employees on 31 December
Total
2021
1,309
1,309
2020
1,304
1,304
The average number of FTE’s of our continuing operations during the years 2021 and 2020 was:
Members of the management board
Research and development
Commercial and medical affairs
Corporate and support
Total
Year ended 31 December
2021
2020
6
636
338
332
6
611
144
335
1,312
1,096
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FINANCIAL STATEMENTS
Their aggregate remuneration comprised:
(thousands of €)
Wages and salaries
Social security costs
Retirement benefit costs
Costs related to subscription right plans
Other personnel costs
Total personnel costs
Year ended 31 December
2021
2020
(175,167)
(139,681)
(29,934)
(26,471)
(8,467)
(7,337)
(70,726)
(79,959)
(11,237)
(9,897)
(295,531)
(263,345)
9. Fair value re-measurement of warrants granted to
Gilead
Total fair value re-measurement for the years ended 31 December 2021 and 31 December 2020
can be split up as follows:
(thousands of €)
Fair value re-measurement of initial warrant B
Total fair value re-measurement of warrants granted to Gilead
Year ended 31 December
2021
2,960
2,960
2020
3,034
3,034
Gilead warrants B
We measured the warrants (initial and subsequent warrant B) at fair value and recognized a
warrant issuance liability at closing date of the transaction on 23 August 2019. Upon approval
of the issuance of initial warrant B on 22 October 2019 (warrant approval date) the variable
consideration was re-measured with a corresponding impact on the transaction price allocated
to the performance obligation relating to our drug discovery platform, and the warrant issuance
liability became a financial liability measured at fair value with changes through profit or loss as
from that moment.
The issuance of initial warrant B was approved on 22 October 2019 by the extraordinary general
meeting of shareholders and is not yet exercised by Gilead at 31 December 2021. The fair
value measurement of this financial liability is categorized as level 3 in the fair value hierarchy.
Initial warrant B has been valued on the basis of a Longstaff-Schwartz Monte Carlo model. The
input data used in the model were derived from market observations (volatility, discount rate
and share price) and from management estimates (number of shares to be issued and applied
discount for lack of marketability). The recognized fair value gain of €3.0 million for the year
ended 31 December 2021, is mainly the result of the decrease of our share price and of its
implied volatility in 2021. The fair value of the financial liability related to the initial warrant B of
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FINANCIAL STATEMENTS
€0.2 million on 31 December 2021 (€3.2 million on 31 December 2020) is presented as current
financial instrument in our consolidated statement of financial position and will be re-measured
at each reporting period.
(thousands of €)
Year ended 31 December
2021
2020
Fair value of financial liability at 1 January
(3,164)
(6,198)
Change in fair value recorded in profit or loss
Fair value on 31 December
2,960
(204)
3,034
(3,164)
Subsequent warrant B is still subject to approval by an extraordinary general meeting of shareholders
and is therefore still presented as warrant issuance liability in our deferred income (we refer to note
25 for more information). Subsequent warrant B has been valued on the basis of a Longstaff-Schwartz
Monte Carlo model. The input data used in the model were derived from market observations (volatility,
discount rate and share price) and from management estimates (number of shares to be issued and
applied discount for lack of marketability).
10. Other financial income/expenses
The following table summarizes other financial
31 December 2021 and 2020.
income and expenses for the years ended
(thousands of €)
Other financial income:
Interest income
Effect of discounting long term R&D incentives receivables
Currency exchange gain
Fair value gain on financial assets held at fair value
through profit or loss
Fair value gain on current financial investments
Other finance income
Total other financial income
Year ended 31 December
2021
2020
2,865
93
60,727
10,030
93
4,697
-
2,397
6,763
100
-
1,450
70,548
18,667
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FINANCIAL STATEMENTS
(thousands of €)
Other financial expenses:
Interest expenses
Year ended 31 December
2021
2020
(11,656)
(9,389)
Effect of discounting long term deferred income
(9,289)
(16,278)
Currency exchange loss
(4,235)
(110,416)
Fair value loss on financial assets held at fair value
through profit or loss
Loss upon sale of financial assets held at fair value
through profit or loss
Fair value loss on current financial investments
Other finance charges
Total other financial expenses
(4,919)
-
-
-
(88)
(15,901)
(812)
(773)
(30,911)
(152,844)
Total net other financial income/expenses (-)
39,638
(134,177)
The currency exchange gain in 2021 of €60.7 million primarily consisted of an unrealized
exchange gain of €56.6 million on cash and cash equivalents held in U.S. dollars, as compared to
an unrealized exchange loss in 2020 of €106.4 million on cash and cash equivalents and current
financial investments held in U.S. dollars. As from 2021, the currency exchange results on the
current financial investments (an exchange gain of €16.3 million in 2021) are reported, together
with the other fair value results on current financial
investments, on the line fair value gain
(or loss) on current financial investments. We have cash, cash equivalents and current financial
investments held in U.S. dollars, which could generate foreign currency exchange gain or loss in
our financial results in accordance with the fluctuation of the EUR/U.S. dollar exchange rate as
our functional currency is EUR.
Net currency exchange gain amounted to €56.5 million for the year ended 31 December 2021,
compared to a net currency exchange loss of €105.7 million for the year ended 31 December
2020.
Interest expenses were related to interests on term deposits, treasury bills that came to maturity
and on leases of buildings and cars. Other financial expense for 2021 also included €9.3 million
of costs (€16.3 million for the year ended 31 December 2020) linked to the accounting under
IFRS 15 for a financing component embedded in the upfront consideration received from Gilead
in connection with the revised agreement for filgotinib.
Interest income was related to interests on term deposits, notice accounts and current financial
investments.
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FINANCIAL STATEMENTS
For the year ended 31 December 2021, fair value loss on financial assets held at fair value
through profit or loss consisted of negative effects from the fair value re-measurement of
financial assets classified as equity investments which qualify for level 1 fair value measurement
based upon the closing price of such securities at each reporting date, and of an impairment
loss on a participation in a non-listed company. The fair value gain on the current financial
investments in 2021 reflected the positive exchange differences booked on these current
financial
investments, compensated by the interest on the treasury bills which have not yet
expired and the effect of the re-measurement at fair value of our money market funds on
31 December 2021. These re-measurement losses were mainly the result of the negative returns
on the EUR denominated money market funds.
11. Income taxes
The following table summarizes the income tax recognized in profit or loss for the years ended
31 December 2021 and 2020.
(thousands of €)
Current tax
Deferred tax
Total income taxes
Year ended 31 December
2021
2020
(2,020)
(1,069)
(404)
(157)
(2,423)
(1,226)
Current tax, consisting of corporate income taxes, and deferred tax income/cost (–) related to
subsidiaries working on a cost plus basis.
Tax liabilities
The below table illustrates the tax liabilities related captions in the consolidated statement of
financial position as at 31 December 2021 and 2020.
(thousands of €)
Current tax payable
Total tax liabilities
31 December
2021
1,782
1,782
2020
1,248
1,248
On 31 December 2021, the tax liabilities were primarily related to our subsidiaries operating on
a cost plus basis.
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FINANCIAL STATEMENTS
Taxes recognized in profit or loss
For the purpose of the disclosure below corporation tax was calculated at 25% (2020: 25%) –
which is the tax rate applied in Belgium – on the estimated assessable profit for the year. The
applied tax rate for other territorial jurisdictions was the tax rate that is applicable in these
respective territorial jurisdictions on the estimated taxable result of the accounting year.
(thousands of €)
Loss before tax
Year ended 31 December
2021
2020
(122,999)
(309,775)
Income tax debit/credit (-), calculated using the Belgian statutory
tax rate on the accounting profit/loss (-) before tax (theoretical)
(30,750)
(77,444)
Tax expenses in income statement (effective)
2,423
1,226
Difference in tax expenses/income to explain
33,173
78,670
Effect of tax rates in other jurisdictions
Effect of non-taxable revenues
(582)
184
(9,413)
(10,196)
Effect of share-based payment expenses without tax impact
17,682
19,990
Effect of expenses/income (-) not subject to tax
Effect of non-tax-deductible expenses
Effect of recognition of previously non recognized deferred tax
assets
Effect of tax losses (utilized) reversed
Effect from under or over provisions in prior periods
(907)
3,812
(1,411)
(404)
(840)
(639)
1,053
(475)
(150)
(25)
Effect of non-recognition of deferred tax assets
25,613
69,141
Effect of derecognition of previously recognized deferred tax assets
Effect of use of investment deduction
Total explanations
135
(512)
157
(370)
33,173
78,670
Non-taxable revenues for the years ended 31 December 2021 and 2020 were related to non-
taxable subsidies and tax credits.
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FINANCIAL STATEMENTS
12. Income/loss (–) per share
Basic income/loss (–) per share is calculated by dividing the net income/loss (–) attributable to
owners of the parent by the weighted average number of ordinary shares outstanding during
the year. Diluted income/loss (–) per share is calculated based on the weighted average number
of shares (diluted) also considering outstanding subscription rights, for which our average share
price of the year was higher than the exercise price.
Net loss attributable to owners of the parent (thousands of €)
(103,231)
(305,436)
Year ended 31 December
2021
2020
Number of shares (thousands)
Weighted average number of shares for the purpose of basic
income / loss (-) per share
65,500
65,075
Basic loss per share (€)
(1.58)
(4.69)
Net loss attributable to owners of the parent (thousands of €)
(103,231)
(305,436)
Number of shares (thousands)
Weighted average number of shares for the purpose of diluted
income / loss (-) per share
65,500
65,075
Number of dilutive potential ordinary shares
-
-
Diluted loss per share (€)
(1.58)
(4.69)
As we reported a net loss in 2021 and 2020, the outstanding subscription rights (specified in note
30) have an anti-dilutive effect rather than a dilutive effect. Consequently, basic and diluted loss
per share is the same for 2021 and 2020.
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FINANCIAL STATEMENTS
13. Intangible assets
Brands,
licenses,
Software &
patents &
(thousands of €)
databases
know-how Contract costs
Total
Acquisition value
On 1 January 2020
Additions
Sales and disposals
Reclassifications to assets held
for sale
Translation differences
15,384
14,541
9,494
(17)
(159)
(143)
5,172
39,299
(38)
(1)
35,099
48,793
(17)
(197)
(144)
On 31 December 2020
23,717
44,432
15,384
83,534
Additions
2,423
1,250
Sales and disposals
(1,643)
(5,753)
Translation differences
57
3,673
(7,396)
57
On 31 December 2021
24,554
39,929
15,384
79,868
Amortization and impairment
On 1 January 2020
Amortization
Sales and disposals
Reclassifications to assets held
for sale
Translation differences
On 31 December 2020
Amortization
Impairment
8,034
2,303
(17)
(143)
(142)
10,034
3,529
1,626
2,289
(33)
3,883
2,053
4,016
512
1,538
2,050
1,538
Sales and disposals
(1,643)
(5,753)
Translation differences
57
10,173
6,130
(17)
(176)
(142)
15,968
7,120
4,016
(7,396)
57
On 31 December 2021
11,977
4,199
3,588
19,765
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FINANCIAL STATEMENTS
Brands,
licenses,
Software &
patents &
(thousands of €)
databases
know-how Contract costs
Total
Carrying amount
On 31 December 2020
On 31 December 2021
13,683
12,577
40,549
35,730
13,334
11,796
67,565
60,103
New additions in 2021 primarily related to the capitalization of an in-licensing fee for an amount
of €1.2 million and software acquisitions for a total amount of €2.4 million.
On 31 December 2021, our balance sheet did not hold any internally generated assets
capitalized as intangible asset.
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FINANCIAL STATEMENTS
14. Property, plant and equipment
Fully owned
(thousands of €)
improvements
machinery
vehicles
assets
Total
Land &
Furniture,
building
Installation &
fixtures &
Other tangible
Acquisition value
On 1 January 2020
5,284
44,655
Additions
Sales and disposals
885
(51)
3,737
(1,096)
4,028
1,824
(81)
17,856
71,823
32,218
38,664
(1,228)
Reclassifications
10,625
(623)
2,084
(12,086)
-
Reclassifications to assets
held for sale
Translation differences
(2)
(2)
(8,938)
(127)
(484)
(19)
(686)
(10,110)
(30)
(178)
On 31 December 2020
16,739
37,607
7,352
37,273
98,972
Additions
1,924
4,453
434
46,028
52,839
Sales and disposals
(1,001)
(1,177)
(9,316)
(11,494)
Reclassifications
7,273
5,210
1,175
(13,658)
Translation differences
195
1
45
(3)
-
238
On 31 December 2021
26,131
46,270
7,829
60,324
140,555
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FINANCIAL STATEMENTS
(thousands of €)
improvements
machinery
vehicles
assets
Total
Land &
Furniture,
building
Installation &
fixtures &
Other tangible
Depreciation and
impairment
On 1 January 2020
3,080
25,885
Depreciations
Sales and disposals
Reclassifications
Reclassifications to assets
held for sale
654
(51)
46
3,587
(1,058)
(4,327)
Translation differences
(1)
(61)
On 31 December 2020
3,728
22,350
Depreciations
Impairment
1,749
3,398
(1,675)
1,629
2,119
1,418
(77)
(448)
(13)
4,628
1,113
31
7
31,117
5,666
(1,186)
-
(39)
(4,814)
(75)
-
30,708
6,260
9,316
9,316
Sales and disposals
(1,000)
(1,178)
(9,316)
(11,494)
Translation differences
28
1
18
47
On 31 December 2021
5,505
24,749
4,582
-
34,837
Carrying amount
On 31 December 2020
13,011
15,257
On 31 December 2021
20,626
21,521
2,724
3,247
37,273
68,264
60,324
105,718
The other tangible assets primarily consist of assets under construction, mainly related to our
new building in Leiden (the Netherlands), which are not yet available for use and therefore not
yet depreciated as per 31 December 2021.
In 2021 we recorded an exceptional
impairment of €9.3 million on the other tangible fixed
assets following our decision to reassess the construction project of our new future headquarter
location in Mechelen (Belgium).
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Land &
Installation &
building
machinery
Furniture,
fixtures &
vehicles
Total
31,225
21,459
(167)
(6,202)
(90)
46,225
6,924
(5,133)
223
554
186
(6)
734
110
(251)
3,307
2,932
(161)
(263)
(3)
5,812
5,092
(722)
2
593
10,184
48,239
342
128
(6)
464
161
(251)
867
1,405
(161)
(115)
(1)
1,995
2,296
(722)
5,879
6,883
(167)
(1,448)
(36)
11,111
7,923
(2,669)
79
27,364
18,341
(5,940)
(88)
39,678
1,722
(4,160)
221
37,461
4,670
5,350
(1,334)
(36)
8,651
5,466
(1,696)
79
Right-of-use
(thousands of €)
Acquisition value
On 1 January 2020
Additions
Sales and disposals
Reclassifications to assets held
for sale
Translation differences
On 31 December 2020
Additions
Sales and disposals
Translation differences
On 31 December 2021
Depreciation and impairment
On 1 January 2020
Depreciations
Sales and disposals
Reclassifications to assets held
for sale
Translation differences
On 31 December 2020
Depreciations
Sales and disposals
Translation differences
On 31 December 2021
12,500
374
3,569
16,444
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FINANCIAL STATEMENTS
(thousands of €)
Carrying amount
Land &
Installation &
building
machinery
Furniture,
fixtures &
vehicles
Total
On 31 December 2020
On 31 December 2021
31,027
24,961
270
219
3,817
6,615
35,113
31,794
Carrying amount
(thousands of €)
Property, plant and equipment fully owned
Right-of-use
31 December
2021
105,718
31,794
2020
68,264
35,113
Total property, plant and equipment
137,512
103,378
There are no pledged items of property, plant and equipment. There are also no restrictions in
use on any items of property, plant and equipment.
15. Other non-current assets
Other non-current assets consisted of non-current restricted cash, financial assets held at fair
value through profit or loss, and other non-current assets.
(thousands of €)
Non-current restricted cash
Financial assets held at fair value through profit or loss
Other non-current assets
Total other non-current assets
31 December
2021
1,425
-
1,048
2,473
2020
1,482
8,951
910
11,343
Restricted cash on 31 December 2021 was composed of bank guarantees on real estate lease
obligations in Belgium and in the Netherlands for €1.0 million, and €0.4 million, respectively.
Financial assets held at fair value through profit or loss at 31 December 2020 consisted of equity
instruments of both listed and non-listed companies. During 2021 all equity instruments of listed
companies were sold. We have no restrictions on the sale of these equity instruments and
the assets are not pledged under any of our liabilities. These instruments are designated as
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FINANCIAL STATEMENTS
financial assets held at fair value through profit or loss. The fair value of the equity instrument
in the non-listed company which was originally determined mainly by reference to the initial
transaction price (classified as level 3 in the fair value hierarchy) has been reduced to nil at
31 December 2021.
Fair value changes on financial assets with fair value through profit or loss are recognized in other
financial income/other financial expenses.
The table below illustrates these financial assets held at fair value through profit or loss as at
31 December 2021 and 2020.
(thousands of €)
Cost at 1 January
Acquisitions of the year
Disposals of the year
Cost at 31 December
Fair value adjustment at 1 January
Cancellation of fair value adjustment following disposal
Fair value adjustment of the year
Fair value adjustment at 31 December
Net book value at 31 December
31 December
2021
3,910
12
2020
4,736
1,994
(1,928)
(2,820)
1,994
3,910
5,042
(2,116)
(4,920)
(1,994)
-
6,539
(3,894)
2,397
5,042
8,951
16. Research and development incentives receivables
The table below illustrates the R&D incentives receivables related captions in the balance sheet
as at 31 December 2021, and 2020.
(thousands of €)
31 December
2021
2020
Non-current R&D incentives receivables
127,186
111,624
Current R&D incentives receivables
Total R&D incentives receivables
16,827
24,104
144,013
135,728
The increase in R&D incentives receivables is explained by additional R&D incentives reported
in 2021 for €33.2 million (€12.4 million related to French incentives and €20.9 million related
to Belgian incentives), by the release of discounting profit of €0.1 million, decreased by the
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FINANCIAL STATEMENTS
setup of tax provisions in France and Belgium for respectively €0.7 million and €0.05 million and
decreased by the payments received in 2021 related to French and Belgian incentives amounting
to respectively €18.8 million and €5.5 million. The R&D incentives receivables are future expected
refunds or tax deductions resulting from tax incentives on research and development expenses
in France and Belgium. Non-current R&D incentives receivables are reported at their net present
value and are therefore discounted over the period until maturity date.
The table below provides detailed information on the maturity of the non-current R&D incentives
receivables reported in our balance sheet on 31 December 2021.
31 December 2021
Maturity date
(thousands of €)
2023
2024
2025
2026 2027 - 2031
Total
French non-current R&D
incentives receivables -
discounted value
11,911
11,713
11,489
35,113
Belgian non-current R&D
incentives receivables -
discounted value
9,621
12,258
14,895
16,705
38,594
92,073
Total non-current R&D
incentives receivables -
discounted value
21,532
23,971
26,384
16,705
38,594
127,186
17. Inventories
The following table provides an overview of our inventories by type of inventory:
(thousands of €)
Raw materials
Semi-finished products
Finished products purchased for resale
Total inventories
31 December
2021
14,351
1,376
4,842
20,569
2020
-
-
36
36
The cost of inventories, which is recognized as an expense and included in the “cost of sales”
line, amounted to €1.6 million for the year ended 31 December 2021. Finished goods at
31 December 2021 consisted in full out of Jyseleca finished products purchased from Gilead.
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18. Trade and other receivables and other current
assets
(thousands of €)
Non-current trade receivables
Trade receivables
Prepayments
Other receivables
Trade and other receivables
Consumables inventory
Accrued income
Deferred charges
Other current assets
31 December
2021
2020
-
50,000
91,786
134,632
202
219
19,349
13,568
111,337
148,418
-
639
9,306
9,945
319
1,096
10,502
11,917
Total trade and other receivables & other current assets
121,282
210,335
Non-current and current trade and other receivables decreased primarily due to the outstanding
receivable as at 31 December 2020 of €160.0 million on Gilead related to the renegotiated
agreement of December 2020 for filgotinib, for which we received payments in 2021 of
€110 million (a receivable of €50 million being still outstanding on 31 December 2021 and
expected to be received in the first quarter of 2022). Additionally, we also recorded a receivable
of €12.6 million ($15 million) from Gilead following the agreement for the take-over by us of the
DIVERSITY clinical trial. We refer to note 2 Summary of significant transaction for more details.
We consider that the carrying amount of trade and other receivables approximates their fair
value.
The other current assets mainly included accrued income from subsidy projects and deferred
charges.
On 31 December 2021, we did not have any provision for expected credit losses.
19. Current financial investments
On 31 December 2021, our current financial
investments amounted to €2,469.8 million
compared to €3,026.3 million on 31 December 2020. On 31 December 2021 these current
financial investments included treasury bills for an amount of €877.3 million (€1,454.4 million
on 31 December 2020), money market
funds of €1,317.5 million (€1,571.9 million on
31 December 2020) and non-cancellable term deposits with a maturity exceeding three months
from the acquisition date of €275.0 million (nil on 31 December 2020). Our portfolio of treasury
issued by Germany. Our money market funds portfolio
bills contains only AAA rated paper,
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FINANCIAL STATEMENTS
consists of AAA short-term money market funds with a diversified and highly rated underlying
portfolio managed by established fund management companies with a proven track record
leading to an insignificant risk of changes in value. The funds have an important daily liquidity and
can be easily converted to cash.
On 31 December 2021, our current financial investments included $134.6 million held in USD,
which could generate a foreign currency exchange gain or loss in our financial results in
accordance with the fluctuation of the EUR/USD exchange rate as our functional currency is
EUR. This effect is embedded in the fair value result of current financial investments in our
consolidated income statement.
We refer to note 33 for more information on our current financial investments and to note 10 for
more details about the currency exchange gains or losses recognized in our income statement.
20. Cash and cash equivalents
(thousands of €)
Cash at banks
Term deposits
31 December
2021
2020
1,225,860
1,239,993
1,007,508
895,194
Cash and cash equivalents from continuing operations
2,233,368
2,135,187
Cash and cash equivalents included in assets classified as
held for sale
-
7,884
Total cash and cash equivalents
2,233,368
2,143,071
Cash and cash equivalents may comprise cash at banks, bank deposits and money market funds
that are readily convertible to cash and are subject to an insignificant risk of changes in value.
Cash and cash equivalents on 31 December 2021 comprised €1,007.5 million of term deposits
which all had an original maturity longer than 3 months but are readily convertible to cash
without a significant penalty. All cash and cash equivalents are available upon maximum three
month notice period and without significant penalty. Cash at banks were mainly composed of
notice accounts and current accounts. Our credit risk is mitigated by selecting a panel of highly
rated financial institutions for our deposits.
On 31 December 2021, our cash and cash equivalents included $807.9 million held in USD, which
could generate a foreign currency exchange gain or loss in our financial results in accordance
with the fluctuation of the EUR/USD exchange rate as our functional currency is EUR. We refer
to note 10 for more details about the currency exchange gains or losses recognized in our
consolidated income statement.
The net increase in cash and cash equivalents of €90.3 million was composed of (i) €564.8 million
of operational cash burn, (ii) €3.3 million of cash proceeds from capital and share premium
increase from exercise of subscription rights in 2021, (iii) the net sale of current financial
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FINANCIAL STATEMENTS
investments of €566.4 million, (iv) €56.8 million of positive unrealized exchange differences, and
(v) €28.7 million cash proceeds from disposal of Fidelta.
Operational cash burn (or operational cash flow if this liquidity measure is positive) is a financial
measure that is not calculated in accordance with IFRS. Operational cash burn/cash flow is
defined as the increase or decrease in our cash and cash equivalents (excluding the effect of
exchange rate differences on cash and cash equivalents), minus:
1.
2.
the net proceeds, if any, from share capital and share premium increases included in the
net cash flows generated from/used in (–) financing activities
the net proceeds or cash used,
in acquisitions or disposals of businesses; the
movement in restricted cash and movement in current financial investments, if any, included
in the net cash flows generated from/used in (–) investing activities.
if any,
This alternative liquidity measure is in our view an important metric for a biotech company in the
development stage.
The following table presents a reconciliation of operational cash burn,
IFRS measures, for each of the periods indicated:
to the closest
(thousands of €)
2021
2020
Increase in cash and cash equivalents
(excluding effect of exchange differences)
Less:
33,535
351,994
Net proceeds from capital and share premium increases
(3,314)
(28,287)
Net sale of current financial investments
(566,365)
(841,110)
Cash in from disposals of subsidiaries, net of cash disposed of
(28,696)
-
Total operational cash burn
(564,840)
(517,404)
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21. Share capital
The share capital of Galapagos NV, as set forth in the articles of association, reconciles to ‘share
capital’ on the balance sheet as follows:
(thousands of €)
On 1 January
Share capital increase
Costs of capital increase
31 December
2021
2020
291,312
287,282
763
-
4,031
-
Share capital on 31 December
292,075
291,312
Aggregate share capital
Costs of capital increase (accumulated)
Share capital on 31 December
354,582
353,819
(62,507)
(62,507)
292,075
291,312
Costs of capital increases are netted against the proceeds of capital increases, in accordance with
IAS 32 Financial instruments: disclosure and presentation.
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History of share capital
The history of the share capital of Galapagos NV between 1 January 2020 and 31 December 2021
is as follows:
Share capital
Aggregate
increase due to
Number of
number
Share capital
exercise
shares
of shares after
Aggregate share
increase new
subscription
issued
transaction
capital after
shares
rights
(in thousands
(in thousands
transaction
Date
(in thousands €)
(in thousands €)
of shares)
of shares)
(in thousands €)
1 January 2020
17 March 2020
28 May 2020
18 September
2020
4 December 2020
31 December
2020
1 January 2021
19 March 2021
7 June 2021
20 September
2021
3 December 2021
31 December
2021
824
2,356
467
384
540
59
41
123
152
436
86
71
100
11
8
23
64,667
349,789
65,412
353,819
65,412
353,819
65,553
354,582
On 31 December 2021, Galapagos NV’s share capital amounted to €354,582 thousand,
represented by 65,552,721 shares. All shares were issued, fully paid up and of the same class.
All of the share issuances listed above were for cash consideration.
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FINANCIAL STATEMENTS
The below table summarizes our capital increases for the years 2021 and 2020.
Average
Closing
exercise
share
price
price on
subscription
Share
rights
date of
capital
capital and
(in €/
increase
(thousands of €, except
Number of
Share
Share
share
subscription
share data)
shares
capital
premium
premium
right)
(in €/
share)
On 1 January 2021
65,411,767
291,312
2,727,840
3,019,153
19 March 2021: exercise of
subscription rights
99,814
540
1,718
2,258
22.62
68.48
7 June 2021: exercise of
subscription rights
10,940
59
266
325
29.73
61.78
20 September 2021:
exercise of subscription
rights
7,600
41
111
152
19.97
46.93
3 December 2021: exercise
of subscription rights
22,600
123
456
579
25.61
41.72
On 31 December 2021
65,552,721
292,075
2,730,391
3,022,467
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FINANCIAL STATEMENTS
Average
Closing
exercise
share
price
price on
subscription
Share
rights
date of
capital
capital and
(in €/
increase
(thousands of €, except
Number of
Share
Share
share
subscription
share data)
shares
capital
premium
premium
right)
(in €/
share)
On 1 January 2020
64,666,802
287,282
2,703,583
2,990,865
17 March 2020: exercise of
subscription rights
152,220
824
4,531
5,355
35.18
141.40
28 May 2020: exercise of
subscription rights
435,540
2,356
15,558
17,914
41.13
186.60
18 September 2020:
exercise of subscription
rights
86,280
467
1,936
2,403
27.85
117.70
4 December 2020: exercise
of subscription rights
70,925
384
2,232
2,616
36.88
100.30
On 31 December 2020
65,411,767
291,312
2,727,840
3,019,153
The supervisory board is authorized for a period of five years starting from the date of publication
in the Annexes to the Belgian State Gazette of the shareholders’ resolution that granted the
renewed authorization to increase the share capital of Galapagos NV within the framework of the
authorized capital through contributions in kind or in cash, with limitation or cancellation of the
shareholders’ preferential subscription rights. Said authorization can be renewed. The authorized
capital of Galapagos NV consists of two parts. A general authorization for capital increases up to
20% of the share capital at the time of convening the shareholders’ meeting of 22 October 2019
(i.e. €67,022,402.04) was renewed and is valid for a period of five years from the date of
publication of this renewal in the Annexes to the Belgian State Gazette, i.e. 13 November 2019. A
specific authorization for capital increases of more than 20% and up to 33% of the share capital
at the time of the convening the shareholders’ meeting of 25 April 2017 (i.e. €82,561,764.93), was
renewed and is valid for a period of five years from the date of publication of this renewal in
the Annexes to the Belgian State Gazette, i.e. 31 May 2017. This specific part of the authorized
capital can, however, only be used in a number of specific circumstances and upon a resolution
of the supervisory board that all independent supervisory board members (within the meaning
of article 7:87 of the Belgian Companies Code and 2020 Code) approve. The supervisory board
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FINANCIAL STATEMENTS
is currently not authorized to increase the share capital after notification by the FSMA (Financial
Services and Markets Authority) of a public takeover bid on Galapagos NV’s shares. The specific
authorization will expire on 30 May 2022.
As of 31 December 2021, an amount of €41,775,187.16 still remained available under the general
part of the authorized capital and an amount of €13,717,929.80 remained available under the
specific part of the authorized capital.
22. Deferred tax
(thousands of €)
Recognized deferred tax assets and liabilities
Assets
Liabilities
31 December
2021
2020
4,032
4,475
-
-
Deferred tax assets unrecognized
408,892
365,639
Deferred taxes in the consolidated income statement
(404)
(157)
Tax benefit arising from previously unrecognized tax assets used to
reduce deferred tax expense (+)
Deferred tax expenses relating to temporary differences
Deferred tax expenses relating to use or derecognition of
1,411
(629)
581
(44)
previously recognized deferred tax assets
(1,185)
(695)
The consolidated tax losses,
innovation income deduction, dividend received deduction and
investment deduction carried forward and the deductible temporary differences on
31 December 2021 amounted in total to €1,653.7 million (2020: €1,485.8 million), €2.8 million
were related to tax losses with expiry date between 2028 and 2034.
The available tax losses carried forward that can be offset against future taxable profits
amounted to €635.6 million on 31 December 2021 (€478.6 million on 31 December 2020). These
tax losses can be compensated with future profits for an indefinite period except for an amount
of €2.8 million in the United States with expiry date between 2028 and 2034. On 31 December
2021, the available tax losses carried forward in Galapagos NV (Belgium) amounted to
In addition to the latter, Galapagos NV (Belgium) also
€556.9 million (2020: €416.6 million).
benefits from the Belgian innovation income deduction regime which led to report, on
31 December 2021, a carried forward tax deduction amounting to €301.3 million (2020:
€247.2 million) that can also be offset against future taxable results. In addition, Galapagos NV
(Belgium) also has available investment deduction carried forward of €1 million (2020: €1 million)
and dividend received deduction carried forward of €8.2 million (2020: €8.4 million) that can be
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FINANCIAL STATEMENTS
offset against future taxable profits. There is no limit in time for the innovation income deduction,
the dividend received deduction and investment deduction carried forward.
With the exception of 2019, we have a history of losses. We forecast to continue incurring taxable
losses in the foreseeable future as we continue to invest in clinical and preclinical development
programs and discovery platforms. Consequently, no deferred tax asset was recognized as at
31 December 2021, except for subsidiaries operating on a cost plus basis, for which deferred tax
assets were recognized for €4.0 million (2020: €4.5 million).
23. Lease liabilities
(thousands of €)
Lease liabilities
Within one year
Lease payments
payments
Present value of lease
31 December
31 December
2021
2020
2021
2020
7,557
6,772
7,204
6,401
In the second to fifth years inclusive
18,873
20,399
18,381
19,833
After five years
1,291
3,214
1,274
3,201
27,720
30,385
26,859
29,436
Less future finance charges
861
949
Present value of lease obligation
26,859
29,436
Less amount due for settlement within 12
months
Amount due for settlement after 12
months
7,204
6,401
19,655
23,035
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FINANCIAL STATEMENTS
24. Trade and other liabilities
(thousands of €)
Trade and other liabilities
Other non-current liabilities
Accrued charges
31 December
2021
2020
134,304
171,316
7,135
3,114
8,096
1,070
Total trade and other liabilities
144,553
180,482
The decrease in trade and other liabilities is mainly due to lower trade liabilities on
31 December 2021, partly compensated by higher bonus and RSU payables.
25. Deferred income
The movement in the non-current and current deferred income is detailed in the table below.
Deferred
income
Gilead
related to
(thousands of €)
Gilead
collaboration
contracts in
Other
collaboration
agreement for
our fee-for-
deferred
agreement for
Total
filgotinib
drug discovery
platform(1)
service
segment
income
(grants)
On 1 January 2020
3,000,646
780,261
2,220,013
362
10
Upfront consideration
160,000
160,000
Milestones received
90,192
90,192
Significant financing
component(2)
16,278
16,278
Revenue recognition of
upfront
(411,417)
(181,816)
(229,601)
Revenue recognition of
milestones
(46,261)
(46,261)
Other movements
(305)
(362)
On 31 December 2020
2,809,133
818,654
1,990,412
-
57
67
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Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Deferred
income
Gilead
related to
(thousands of €)
Gilead
collaboration
contracts in
Other
collaboration
agreement for
our fee-for-
deferred
agreement for
Total
filgotinib
drug discovery
platform(1)
service
segment
income
(grants)
Upfront consideration
12,643
12,643
Significant financing
component(2)
9,289
9,289
Revenue recognition of
upfront
(433,884)
(203,301)
(230,582)
Revenue recognition of
milestones
(32,408)
(32,408)
Other movements
(67)
On 31 December 2021
2,364,701
604,875
1,759,828
-
(67)
-
(1) The upfront received and the outstanding balance at 31 December 2021 and at 31 December 2020 comprise the
issuance liabilities for the warrants and the upfront payment allocated to the drug discovery platform.
(2) With regard to the additional consideration received for the extended cost sharing for filgotinib, we assume the
existence of a significant financing component reflecting the time value of money on the estimated recognition
period.
We refer to note 6 for a detail of the allocation of the transaction price of our collaboration with
Gilead.
229
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FINANCIAL STATEMENTS
26. Discontinued operations
On 23 November 2020 we signed a share purchase agreement with Selvita S.A. in relation to
the disposal of Fidelta d.o.o. (our previous fee-for-service segment). We have classified the
assets and liabilities of Fidelta as held for sale in our financial statements for the year ended
31 December 2020.
The transaction was completed on 4 January 2021 for a total consideration of €37.1 million.
Fidelta will continue performing drug discovery services for us for the next four years for which
we have purchase
amount of €19.3 million on
31 December 2021.
an aggregate
commitments
for
(i) Disposal of Fidelta
a. Consideration received
(thousands of €)
Cash received
Total consideration received
b. Analysis of assets and liabilities over which control was lost
(thousands of €)
Intangible assets
Property, plant and equipment
Other non-current assets
Trade and other receivables
Cash and cash equivalents
Other current assets
Total assets
Non-current lease liabilities
Other non-current liabilities
Trade and other liabilities
Current lease liabilities
Current tax payable
Total liabilities
Net assets disposed of
230
Galapagos NV Annual Report 2021
37,080
37,080
4 January 2021
21
10,050
160
4,428
7,884
863
23,406
4,115
70
4,479
727
356
9,747
13,658
FINANCIAL STATEMENTS
c. Gain on disposal
(thousands of €)
Cash received
Net assets disposed of
Effect of cumulative translation adjustments reclassified from equity on loss of
control
Costs associated to the sale
Gain on disposal
d. Net cash proceeds from disposal of Fidelta
(thousands of €)
Cash received
Less: cash and cash equivalents balances disposed of
Total consideration received, net of cash disposed of
Costs associated to the sale
Cash in from disposal of Fidelta, net of cash disposed of
37,080
(13,658)
(731)
(500)
22,191
37,080
(7,884)
29,196
(500)
28,696
231
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
(ii) Result from discontinued operations
(thousands of €, except share and per share data)
Fee-for-services revenue
Total net revenues
Year ended 31 December
2021
-
-
2020
16,140
16,140
Gain on sale of subsidiaries
22,191
-
Research and development expenditure
General and administrative expenses
-
-
(7,685)
(2,000)
Operating profit
22,191
6,455
Other financial income
Other financial expenses
-
-
179
(176)
Profit before tax
22,191
6,458
Income taxes
Net profit
Basic income per share from discontinued operations
Diluted income per share from discontinued operations
Weighted average number of shares - Basic
(in thousands of shares)
Weighted average number of shares - Diluted
(in thousands of shares)
-
(893)
22,191
5,565
0.34
0.34
0.09
0.08
65,500
65,075
65,831
67,572
232
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
(iii) Cash flow from discontinued operations
(thousands of €)
Net cash flows generated from operating activities
Year ended 31 December
2021
-
2020
7,173
Net cash flows generated from/used in (-) investing activities
28,696
(2,284)
Net cash flows used in financing activities
Net cash flows from discontinued operations
-
28,696
(664)
4,225
233
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
27. Note to the cash flow statement
(thousands of €)
Adjustment for non-cash transactions
Depreciation, amortization and impairment
Share-based compensation expenses
Decrease in retirement benefit obligations and provisions
31 December
2021
2020
34,636
70,726
(2,347)
18,682
79,959
(260)
Unrealized exchange gains (-)/losses and non-cash other financial
result
(57,073)
105,055
Discounting effect of deferred income
Fair value re-measurement of warrants
Net change in (fair) value of current financial investments
Fair value adjustment financial assets held at fair value through
profit or loss
Other non-cash expenses
9,289
(2,960)
(119)
4,919
648
16,278
(3,034)
15,900
(2,396)
539
Total adjustment for non-cash transactions
57,718
230,723
Adjustment for items to disclose separately under operating cash
flow
Interest expense
Interest income
Tax expense
11,656
(2,853)
2,423
9,424
(7,476)
2,119
Total adjustment for items to disclose separately under
operating cash flow
11,227
4,067
Adjustment for items to disclose under investing and financing
cash flows
Gain on sale of subsidiaries
Loss on sale of fixed assets
(22,191)
-
Realized exchange gain on sale of current financial investments
(6,645)
-
82
-
Interest income on current financial assets
(12)
(2,554)
Total adjustment for items to disclose separately under investing
and financing cash flow
(28,847)
(2,472)
234
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
(thousands of €)
Change in working capital other than deferred income
Increase in inventories
Increase (-)/decrease in receivables
Increase/decrease (-) in liabilities
31 December
2021
2020
(21,168)
(100)
79,859
(177,155)
(35,353)
31,163
Total change in working capital other than deferred income
23,337
(146,092)
235
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
28. Off-balance sheet arrangements
Contractual obligations and commitments
On 31 December 2021, we had outstanding obligations for future purchase commitments, which
become due as follows:
(thousands of €)
Total
1 year 1 - 3 years 3 - 5 years
5 years
Less than
More than
Purchase commitments
369,937
212,065
105,947
46,426
5,499
On 31 December 2020, we had outstanding obligations for future purchase commitments, which
become due as follows:
(thousands of €)
Total
1 year 1 - 3 years 3 - 5 years
5 years
Less than
More than
Purchase commitments
347,873
271,922
73,009
2,870
72
In addition to the tables above, we have a contractual cost sharing obligation related to our
collaboration agreement with Gilead for filgotinib. This amounted to €369.9 million on 31
December 2021 (€493.4 million at 31 December 2020),
for which we have purchase
commitments of €169.6 million at 31 December 2021 (€18.1 million at 31 December 2020)
reflected in the tables above.
236
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
29. Contingent assets and liabilities
On 4 January 2021, we closed the sale of our Croatian subsidiary Fidelta. Selvita acquired 100%
of the outstanding shares in Fidelta for a total consideration of €37.1 million. In accordance with
common practice, we gave representations and warranties which are capped and limited in time.
As explained in the summary of the significant transaction in note 2 to our consolidated financial
statements, Gilead and we entered into a license and collaboration agreement to co-develop
filgotinib in different indications. The collaboration was amended several times and in connection
with these amendments Gilead has agreed to irrevocably pay us €160 million, subject to certain
adjustments for higher than budgeted development costs. Gilead paid €110 million in 2021 and
will pay an additional €50 million in 2022. In addition, we will no longer be eligible to receive
any future milestone payments relating to filgotinib in Europe. However, we will remain eligible
to receive tiered royalty percentages ranging from 20% to 30% on Gilead’s global net sales of
filgotinib outside of Europe and future development and regulatory milestone-based payments
of up to $295 million and sales-based milestone payments of up to $600 million. We will pay
royalties on net sales of filgotinib in Europe to Gilead starting 1 January 2024. Under the terms of
the 2021 amendment and upon completion of the transfer of the DIVERSITY clinical study, Gilead
will make a one-time payment of $15 million to us in consideration for assuming responsibility
for this clinical study. From 1 April 2022, we will also be solely responsible for all development
if the European Medicines Agency grants
costs for the DIVERSITY clinical study. In addition,
regulatory approval of filgotinib for the treatment of CD based on data from the DIVERSITY trial,
then royalties payable by us to Gilead will be reduced by 30% across all filgotinib indications and
will become 5.6% to 10.5% of net sales in Europe. Gilead remains responsible for commercial
activities outside of Europe.
Furthermore Gilead received exclusive option rights to acquire a license on compounds.
Exercising such an option would trigger an opt-in payment, a 50 – 50 cost share mechanism for
the future development activities, potential future development and sales-based milestones and
royalties.
30. Share based payments
Subscription right plans
Presented below is a summary of subscription right activities for the reported periods. Various
subscription right plans were approved for the benefit of our employees, and for members of the
supervisory board and independent consultants of Galapagos NV.
The subscription rights offered to members of the supervisory board vest over a period of 36
months at a rate of 1/36th per month. Effective 1 January 2020, we no longer grant subscription
rights to supervisory board members.
Subscription rights approved before 2021 cannot be exercised before the end of the third
calendar year following the year of the grant. In the event of a change of control over Galapagos
NV, all outstanding subscription rights vest immediately and will be immediately exercisable.
237
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
On 30 April 2021 the supervisory board approved “Subscription Right Plan 2021 BE”,
“Subscription Right Plan 2021 RMV” and “Subscription Right Plan 2021 ROW” within the
framework of the authorized capital. Subscription rights granted under Subscription Right Plan
2021 BE will in principle not vest prior to 1 January 2025 and subscription rights granted under
Subscription Right Plan 2021 RMV and Subscription Right Plan 2021 ROW vest in instalments:
with 25% of each grant being exercisable as of 1 January 2023, 25% as of 1 January 2024 and 50%
(the remainder) as of 1 January 2025.
The table below sets forth a summary of subscription rights outstanding and exercisable on
31 December 2021, per subscription right plan:
Subscription
Allocation
Expiry
Exercise
at 1 January
during the
during the
during the
during
December
December
Outstanding
Granted
Exercised
Forfeited
Expired
at 31
at 31
Outstanding
Exercisable
2021
1,365
right plan
date
date
price (€)
2008
2013
2014
2015
26/06/2008 25/06/2021
5.60
16/05/2013 15/05/2021
19.38
55,664
25/07/2014 24/07/2022
14.54
169,340
30/04/2015 29/04/2023
28.75
219,473
2015 (B)
22/12/2015 21/12/2023
49.00
261,500
2015 RMV
22/12/2015 21/12/2023
49.00
40,000
2016
01/06/2016 31/05/2024
46.10
342,625
2016 RMV
01/06/2016 31/05/2024
2016 (B)
20/01/2017 19/01/2025
46.10
62.50
69,000
10,000
2017
17/05/2017 16/05/2025
80.57
595,500
2017 RMV
17/05/2017 16/05/2025
80.57
127,500
year
year
year
the year
2021
2021
(1,365)
(55,664)
(41,800)
(20,250)
(5,000)
(5,000)
(11,875)
-
-
-
-
127,540
127,540
199,223
199,223
256,500
256,500
35,000
35,000
330,750
330,750
69,000
69,000
10,000
10,000
595,500
595,500
127,500
127,500
2018
19/04/2018 18/04/2026
79.88
1,083,245
(77,250)
2018 RMV
19/04/2018 18/04/2026
79.88
137,500
2019
10/04/2019 09/04/2027
95.11
1,477,840
2019 RMV
10/04/2019 09/04/2027
95.11
193,000
2020
17/04/2020 16/04/2028
168.42
1,906,034
2020 RMV
17/04/2020 16/04/2028
168.42
239,525
2021BE
30/04/2021 29/04/2029
2021RMV
30/04/2021 29/04/2029
2021ROW
30/04/2021 29/04/2029
64.76
64.76
64.76
1,117,603
291,725
1,084,105
(177,000)
(2,500)
(288,106)
(12,050)
(33,567)
(9,175)
(102,105)
1,005,995
137,500
1,300,840
190,500
1,617,928
227,475
1,084,036
282,550
982,000
Total
6,929,111 2,493,433
(140,954)
(701,753)
-
8,579,837 1,751,013
238
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Outstanding on 31 December, 2019
Exercisable on 31 December, 2019
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding on 31 December, 2020
Exercisable on 31 December, 2020
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding on 31 December, 2021
Exercisable on 31 December, 2021
Subscription
Weighted average
rights
exercise price (€)
5,541,117
1,139,682
2,173,335
(40,376)
(744,965)
-
6,929,111
1,168,967
2,493,433
(701,753)
(140,954)
-
8,579,837
1,751,013
70.09
30.16
168.42
144.79
37.97
103.95
37.84
64.76
118.53
23.51
-
92.69
56.64
The table below sets forth the inputs into the valuation of the subscription rights.
2021RMV/
2021BE
ROW
2020
2020 RMV
30 April 2021 30 April 2021 17 April 2020 17 April 2020
Exercise Price (€)
64.76
64.76
168.42
168.42
Weighted average share price at acceptance
date (€)
61.10
61.10
178.95
178.95
Weighted average fair value on the
acceptance date (€)
Weighted average estimated volatility (%)
Weighted average expected life of the
subscription right (years)
Weighted average risk free rate (%)
Expected dividends
22.72
40.73
6.43
(0.21)
None
20.68
40.61
5.36
(0.29)
None
86.45
51.30
6.00
(0.44)
None
85.79
51.32
6.00
(0.44)
None
239
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
The exercise price of the subscription rights is determined pursuant to the applicable provisions
of the Belgian Law of 26 March 1999.
The weighted average estimated volatility is calculated on the basis of the implied volatility of the
share price over the weighted average expected life of the subscription rights.
The weighted average expected life of the subscription right is calculated as the estimated
duration until exercise, taking into account the specific features of the plans.
Our share based compensation expense in 2021 in relation to subscription right plans amounted
to €70,726 thousand (2020: €79,959 thousand).
The following table provides an overview of the outstanding subscription rights per category of
subscription right holders on 31 December 2021 and 31 December 2020:
Category (in number of subscription rights)
2021
2020
31 December
Supervisory board members
Management board members(1)
Personnel
157,560
157,560
1,965,000
2,101,874
6,457,277
4,669,677
Total subscription rights outstanding
8,579,837
6,929,111
(1) Piet Wigerinck was a member of the management board until 30 November 2021. Note that his outstanding
subscription rights at 31 December 2020 were reported on the line 'Management board members' while at 31
December 2021 his outstanding subscription rights are presented on the line 'Personnel'.
The outstanding subscription rights at the end of the accounting period have a weighted average
exercise price of €92.69 (2020: €103.95) and a weighted average remaining life of 1,955 days
(2020: 2,050 days).
Restricted stock units (RSUs)
Each RSU represents the right to receive one Galapagos share or a payment in cash of an amount
equivalent to the volume-weighted average price of the Galapagos share on Euronext Brussels
over the 30-calendar day period preceding the relevant vesting date, in accordance with the
terms and conditions of the relevant RSU program.
We currently have the following restricted stock unit (RSU) programs:
Plan 2020.I and Plan 2021.I under which the grants are intended to be made every year, subject
to a decision of the supervisory board. This plan is intended to provide a long-term incentive to
certain of our employees and management board members and replaces the deferred portion
of the bonus under the former Senior Management Bonus Scheme;
Plan 2019.II, Plan 2020.II, Plan 2021.II and Plan 2021.IV. These plans are aimed at retaining a
specific set of our employees and management board members whose retention is deemed so
important for our future performance that an additional incentive is desired. The beneficiaries
240
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
are nominated by the nomination and remuneration committee and the supervisory board
approves the list of beneficiaries;
Plan 2019.I This plan was granted at the discretion of the supervisory board;
Plan 2019.III This exceptional RSU grant took place in 2019 under an RSU Transaction Bonus
Plan for the successful closing of the Gilead transaction;
Plan 2021.III This plan is intended to compensate employees who transferred from Gilead to
us in the framework of the transfer of European commercialization rights, for the long-term
incentive plans within Gilead under which unvested RSU awards lapse upon transfer out of the
Gilead group. These employees received a one-time Restricted Stock Units grant from us.
The main characteristics of all these plans are as follows:
the RSUs are offered for no consideration;
generally four-year vesting period, with 25% vesting each year, except for some plans or
some beneficiaries for which the RSUs will all vest at the same time three years after the offer
date (bullet vesting); vest 50% after two years and 50% after three years or vest over three
years with 34% vesting the first year and 33% in each of the remaining two years;
payout will be in cash or shares, at Galapagos’ discretion, it being understood that in respect
of members of the management board, any vesting prior to the third anniversary of the offer
date will always give rise to a payment in cash rather than a delivery of shares as an incentive;
any unvested RSUs are forfeited upon termination of service before the vesting date.
241
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
The table below sets forth a summary of RSUs outstanding at 31 December 2021, per RSU plan:
Outstanding
Granted
Forfeited
cash
at 31
Allocation
at 1 January
during
during
during
December
Paid in
Outstanding
RSU plan
date
2021
the year
the year
the year
2021
Plan 2019.I
Plan 2019.II
Plan 2019.III
Plan 2020.I
Plan 2020.II
Plan 2021.I.
Plan 2021.II.
Plan 2021.III.
Plan 2021.IV.
Total
16/10/
2019
16/10/
2019
16/10/
2019
06/05/
2020
07/05/
2020
05/05/
2021
06/05/
2021
03/06/
2021
24/09/
2021
33,000
81,807
71,072
54,876
72,841
-
-
-
-
-
(5,000)
-
28,000
(12,034)
(27,269)
42,504
(5,077)
(35,535)
30,460
(10,925)
(11,424)
32,527
(12,663)
(18,210)
41,968
-
-
-
-
180,844
(26,228)
43,328
(2,708)
38,413
(238)
248,933
-
-
-
-
-
154,616
40,620
38,175
248,933
313,596
511,518
(74,873)
(92,438)
657,803
(in number of RSUs)
Outstanding on 1 January
Granted during the year
Forfeited during the year
Paid in cash during the year
Outstanding on 31 December
31 December
2021
2020
313,596
213,147
511,518
128,769
(74,873)
(1,052)
(92,438)
(27,268)
657,803
313,596
The RSUs are measured based on the volume-weighted average price of the Galapagos share on
Euronext Brussels over the 30-calendar day period preceding the reporting period and they are
242
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
re-measured at each reporting date. We recognize the corresponding expense and liability over
the vesting period.
The following table provides an overview of the outstanding RSUs per category of RSU holders on
31 December 2021 and 31 December 2020.
Category (in number of RSUs)
Management board members
Personnel
Total outstanding RSUs
31 December
2021
2020
384,340
229,276
273,463
84,320
657,803
313,596
243
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
31. Related parties
Relationship and transactions with entities with control of, or
significant influence over, Galapagos
Gilead
Gilead is exercising significant influence over Galapagos as from the equity subscription on
23 August 2019. As a result of the equity subscription we received a transparency notification
from Gilead on 28 August 2019 confirming they held 22.04% of the then issued and outstanding
shares of Galapagos.
By exercising warrant A on 6 November 2019, Gilead increased its ownership in Galapagos
to 25.10% of the then outstanding shares. Gilead further increased its ownership to 25.84%
at 31 December 2019. Gilead’s ownership then diluted to 25.54% at 31 December 2020 and
to 25.49% at 31 December 2021, due to four capital increases resulting from the exercise of
subscription rights under employee subscription right plans in the course of respectively 2020
and 2021.
The presumption of significant influence is also confirmed by the fact that Gilead has the right,
for as long as it holds more than 20% of Galapagos’ share capital, to appoint two investor board
designees to Galapagos’ supervisory board, out of a total of eight.
The following balances are outstanding at the end of the reporting period in relation to Gilead:
(thousands of €)
Relations with Gilead
Non-current trade receivables
Trade and other receivables
Trade and other payables
31 December
2021
2020
-
50,000
88,246
11,580
132,825
27,074
The trade and other receivables on 31 December 2021 contain €50 million of receivables related
to the in 2020 modified collaboration for filgotinib, for which we already received €110.0 million
in the course of 2021. They also contain €12.6 million related to the transfer of the sponsorship
and operational and financial responsibility of the ongoing DIVERSITY clinical trial from Gilead to
us, €23.8 million of profit and cost sharing receivables relating to our collaboration for filgotinib
and €1.9 million receivables relating to royalties. The outstanding liabilities mainly relate to the
cross charges from Gilead for the development costs sharing of filgotinib in the fourth quarter of
2021 (€5.7 million) and €1.6 million to purchases of finished goods.
During 2021 we recognized in revenue €230.6 million (€229.6 million for the year ended
31 December 2020) relating to the performance obligation for the drug discovery platform and
a total of €235.7 million (€228.1 million for the year ended 31 December 2020) representing
the total impact on our revenues coming from the filgotinib performance obligation. The latter
consists of upfront payments and milestone payments that were recognized in accordance with
the percentage of completion of the underlying performance obligation.
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Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Additionally, we recognized in 2021 royalty income for an amount of €3.8 million in relation to the
commercialization of filgotinib (€16.2 million for the year ended 31 December 2020).
Furthermore, we recognized €18.1 million (€34.1 million for the year ended 31 December 2020)
of cost reimbursements from Gilead related to the development of GLPG1690 as a decrease
of the related expenses (on the line research and development expenditure). An amount of
€81.3 million (€101.0 million for the year ended 31 December 2020) relating to cross charges
from Gilead relating to filgotinib was recognized as expense on the line research and
development expenditure.
Finally, we recognized in 2021 €59.7 million as a deduction of sales and marketing expenses and
€7.0 million as a deduction of research and development expenditure (compared to a deduction
of €4.7 million of sales & marketing expenses and a deduction of €3.1 million of research &
development expenditure for the year ended 31 December 2020) mainly relating to our 50/50
profit/(cost) share mechanism with Gilead for direct sales of filgotinib in the shared territory and
expenses incurred for the co-promotion activities for filgotinib.
We purchased raw materials, semi-finished products and finished products of Jyseleca from
Gilead for an amount of €24.9 million for the year ended 31 December 2021 (€0.2 million for the
year ended 31 December 2020).
As at 31 December 2021 we have two outstanding performance obligations under IFRS 15
towards Gilead, being the performance obligation related to our drug discovery platform and
the performance obligation relating to filgotinib. This results in an outstanding deferred income
balance of €1.8 billion for the drug discovery platform (including the warrant issuance liability
relating to subsequent warrant B) and €605 million for the performance obligation relating to
filgotinib.
A detailed explanation of our transactions with Gilead in 2020 and 2021 can be found in
the section titled Agreements with major Galapagos NV shareholders. There are no other
shareholders or other entities who, solely or jointly, control Galapagos or exercise significant
influence over Galapagos.
Relationship and transactions with subsidiaries
Please see note 32 for an overview of the consolidated companies of the group, which are all
wholly-owned subsidiaries of Galapagos NV.
Relationship and transactions with key management
personnel
Our key management personnel consists of the members of the management board and
members of the supervisory board. All amounts mentioned in this section are based on expenses
recognized in the financial statements for the relevant financial year.
Remuneration of key management personnel
On 31 December 2021, our management board had five members: Mr. Onno van de Stolpe,
Mr. Bart Filius, Dr. Andre Hoekema, Dr. Walid Abi-Saab and Mr. Michele Manto. They provide their
services to us on a full-time basis. On 31 December 2021, our supervisory board consisted of
eight members: Dr. Raj Parekh, Mr. Howard Rowe, Ms. Katrine Bosley, Dr. Mary Kerr, Mr. Peter
Guenter, Mr. Daniel O’Day, Dr. Linda Higgins and Dr. Elisabeth Svanberg.
245
Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Effective from 1 January 2020, Galapagos no longer grants any subscription rights to supervisory
board members, taking into account the stricter rules of the Belgian Companies Code. Prior to
2020, supervisory board members were granted subscription rights.
Dr. Wigerinck left Galapagos and was our CSO and a management board member until
30 November 2021 and hence the table below for financial year 2021 contains disclosures on his
remuneration until the aforementioned date, including his severance package.
Reference is made to the Remuneration Report, which discloses the remuneration awarded to
each supervisory board and management board member individually during 2021.
The remuneration package of the members of key management personnel comprises:
Year ended 31 December
Thousands of € (except for the number of subscription rights and
RSUs)
2021
2020
Remuneration of key management personnel:
Short-term benefits
4,264
3,102
Management board members as a group(1)
Gross salary
Cash bonus(2)
Other short-term benefits
Long-term benefits for management board members as a group(3)
Board fees and other short-term benefits for supervisory board
members
Raj Parekh
Howard Rowe
Katrine Bosley(4)
Mary Kerr
Peter Guenter
Daniel O'Day(5)
Linda Higgins(5)
Elizabeth Svanberg(6)
2,621
1,172
471
-
220
120
65
115
115
-
-
115
2,531
433
138
-
220
125
115
115
115
-
-
78
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Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
Thousands of € (except for the number of subscription rights and
RSUs)
Post-employment benefits(7)
Total benefits excluding subscription rights and RSUs
Severance payments(8)
Number of subscription rights granted in the year
Year ended 31 December
2021
399
5,413
802
2020
392
4,262
-
Management board members as a group(1)
275,000
275,000
Onno van de Stolpe
Bart Filius
Andre Hoekema
Piet Wigerinck(9)
Walid Abi-Saab
Michele Manto
85,000
50,000
30,000
40,000
40,000
30,000
85,000
50,000
30,000
40,000
40,000
30,000
Total number of subscription rights granted in the year
275,000
275,000
Total cost of subscription rights granted in the year under IFRS 2
5,629
22,921
Number of RSUs granted in the year(10)
Onno van de Stolpe
Bart Filius
Andre Hoekema
Piet Wigerinck(9)
Walid Abi-Saab
Michele Manto
63,830
62,730
51,433
835
44,038
31,694
18,317
12,600
832
12,080
12,080
5,920
Total number of RSUs granted in the year
254,560
61,829
(1) Dr. Wigerinck was a member of the management board until 30 November 2021. His remuneration and benefits
are included in the overview for the financial year 2021.
(2) This aggregate number also includes the 2021 cash bonus of Dr. Wigerinck. Dr. Wigerinck was a management
board member until 30 November 2021.
(3) Only management board members are granted long-term benefits. Pursuant to the Senior Management Bonus
Scheme, these consist ot the deferred part of the bonus from 3 years ago. For FY2020 and FY2021 the deferred
part of the bonus is not paid out.
(4) Ms. Bosley waived her equity related remuneration for the financial year 2021.
(5) Supervisory board member's mandate began on 22 October 2019.
(6) Supervisory board member's mandate began on 28 April 2020.
(7) Only management board members are granted post-employment benefits.
(8) Dr. Wigerinck's severance package excludes his 2021 bonus paid per December 2021 and includes a payment of
€35,416.66 for December 2021 pursuant to a non-competition obligation. During the financial year 2022 these
monthly payments pursuant to a non-competition obligation will continue until 30 November 2022, except if
Galapagos waives this non-competition obligation.
(9) Management board member until 30 November 2021. In 2021, he did not accept his RSU grant under the RSU
LTIP 2021 Plan.
(10) This is the sum of the RSUs awarded during the respective financial year, excluding the RSUs representing the
deferred portion of the bonus for 2020 in FY2020 and for 2021 in FY2021 (each time to be granted in the
following financial year). Only management board members were awarded RSUs.
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FINANCIAL STATEMENTS
Other
No loans, quasi-loans or other guarantees were given by Galapagos NV or any of its subsidiaries
to members of the supervisory board and of the management board. We have not entered into
transactions with our key management personnel, other than as described above with respect
to remuneration arrangements relating to the exercise or termination of their mandates as
members of the management board and the supervisory board.
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FINANCIAL STATEMENTS
32. Consolidated companies as of 31 December 2021
Name of the subsidiary
Galapagos Biopharma Belgium BV
Country
Belgium
Galapagos Biopharma Netherlands B.V.
The Netherlands
Galapagos Biopharma Spain S.L.U.
Galapagos Biopharma Italy S.r.l.
Spain
Italy
Galapagos Biopharma Germany GmbH
Germany
Galapagos Biopharma Sweden AB
Galapagos Biopharma Norway AS
Galapagos Biopharma Finland Oy
Sweden
Norway
Finland
Galapagos Biopharma Denmark ApS
Denmark
Galapagos Biopharma Austria GmbH
Austria
Galapagos Biopharma Ireland Ltd
Ireland
Galapagos Biotech Ltd
United Kingdom
Galapagos B.V.
Galapagos GmbH
Galapagos, Inc.
Galapagos NV
Galapagos Real Estate Belgium BV
The Netherlands
Switzerland
United States
Belgium
Belgium
Galapagos Real Estate Netherlands B.V.
The Netherlands
Galapagos SASU
Fidelta d.o.o.
France
Croatia
Xenometrix, Inc. in liquidation
United States
% voting right
Galapagos NV
(directly
Change
or indirectly
in % voting right
through
previous period
subsidiaries)
(2021 vs 2020)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Parent company
100%
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
(100%)
On 4 January 2021 we closed the sale of our fee-for-service business Fidelta. Selvita S.A. acquired
100% of the outstanding shares in Fidelta.
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FINANCIAL STATEMENTS
In 2021, the following new entities were incorporated: Galapagos Biopharma Sweden AB
(Stockholm, Sweden), Galapagos Biopharma Norway AS (Oslo, Norway), Galapagos Biopharma
Finland Oy (Helsinki, Finland), Galapagos Biopharma Denmark ApS (Copenhagen, Denmark),
Galapagos Biopharma Austria GmbH (Vienna, Austria) and Galapagos Biopharma Ireland Ltd
(Dublin, Ireland).
There are no significant restrictions on the group’s ability to access or use assets, or settle
liabilities, of one of the group’s subsidiaries.
33. Financial risk management
Financial risk factors
Our financial risks are managed centrally. Our finance department coordinates the access to
national and international financial markets and considers and manages continuously the
financial risks concerning our activities. These relate to the following financial markets risks: credit
risk, liquidity risk, currency and interest rate risk. Our interest rate risk is limited because we have
nearly no financial debt. In case of decreasing interest rates we will face a reinvestment risk on
our strong cash and cash equivalents and current financial investments balance. We do not buy
or trade financial instruments for speculative purposes.
Categories of financial assets and liabilities:
(thousands of €)
Financial assets held at fair value through profit or loss
31 December
2021
2020
Equity instruments
-
8,951
Current financial investments
1,317,460
1,571,858
Financial assets at amortized cost
Current financial investments
Cash and cash equivalents
Restricted cash (current and non-current)
Other non-current assets
Trade receivables
Total financial assets
1,152,349
1,454,420
2,233,368
2,135,187
1,425
1,048
1,482
907
91,786
184,632
4,797,436
5,357,438
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Galapagos NV Annual Report 2021
FINANCIAL STATEMENTS
(thousands of €)
Financial liabilities held at fair value through profit or loss
31 December
2021
2020
Current financial instruments
204
3,164
Financial liabilities at amortized cost
Trade liabilities
Lease liabilities
Total financial liabilities
84,519
26,859
134,905
29,436
111,582
167,505
The carrying amounts of trade payables and trade receivables are considered to be the same as
their fair values, due to their short-term nature.
Financial assets held at fair value through profit or loss
Financial assets held at fair value through profit or loss consisted of equity instruments of listed/
non-listed companies and current financial investments.
We have no restrictions on the sale of these equity instruments and the assets are not pledged
under any of our liabilities. These instruments are classified as financial assets held at fair value
through profit or loss. The equity investments in listed companies qualified for level 1 fair value
measurement based upon the closing price of such securities on Euronext at each reporting
date.
The market price of those shares might face fluctuations and might be affected by a variety of
factors, such as the global economic situation, the business development of competitors, sector
mergers and acquisitions; it is difficult to mitigate this risk.
The fair value of the equity instrument in the non-listed company has been determined mainly by
reference to the initial transaction price (classified as level 3 in the fair value hierarchy).
Current financial investments include money market funds in EUR and USD, which all classify for
level 1 fair value measurement.
Liquidity risk
Current financial investments and cash and cash equivalents amounted to €4,703.2 million on
31 December 2021. Management forecasts our liquidity requirements to ensure that we have
sufficient cash to meet operational needs. We have no credit lines. Such forecasting is based on
realistic assumptions with regards to milestone and upfront payments to be received, taking into
account our past track record, including the assumption that not all new projects that are being
planned will be realized.
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FINANCIAL STATEMENTS
All our cash and cash equivalents have only an insignificant liquidity risk as they are all convertible
upon a maximum three month notice period and without incurring a significant penalty in normal
market circumstances.
Credit risk
The term “credit risk” refers to the risk that counterparty will default on its contractual obligations
resulting in financial loss for us.
The trade receivables consist of receivables on our collaboration partner Gilead, creditworthy
pharmaceutical wholesalers and hospitals in Europe. To limit the risk of financial losses, we have
developed a policy of only dealing with creditworthy counterparties.
We grant credit to our clients in the framework of our normal business activities. Usually, we
require no pledge or other collateral to cover the amounts due. Management continuously
evaluates the client portfolio for creditworthiness. All our receivables are considered collectable.
We applied the IFRS 9 simplified approach to measuring expected credit losses which uses a
lifetime expected loss allowance for all receivables. To measure the expected credit losses,
receivables have been grouped based on credit risk characteristics and the days past due. The
provision for expected credit losses was not significant given that there have been no credit
losses over the last three years and the high quality nature of our customers.
Aging balance of receivables that are due, but that are still considered collectable:
(thousands of €)
60 - 90 days
90 - 120 days
more than 120 days
31 December
2021
2020
141
92
113
-
-
-
Our cash and cash equivalents are invested primarily in current, notice and term accounts. For
banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are
accepted at the beginning of the term. Our current financial investments are also kept within
different financial institutions and include term deposits, money market funds and treasury bills
with an AAA rating. The money market funds are invested in a well-diversified portfolio of highly
rated assets.
Interest rate risk
The only variable interest-bearing financial
instruments are cash and cash equivalents and
current financial investments. Our interest rate income is impacted by the negative interest rate
environment in EUR, and the low interest rate environment in USD.
Changes in interest rates may cause variations in interest income and expenses resulting from
short-term interest-bearing assets. Management does not expect the short-term interest rates
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FINANCIAL STATEMENTS
to decrease significantly in the immediate foreseeable future, which limits the interest exposure
on our cash and cash equivalents and current financial investments.
Effect of interest rate fluctuation
A 100 basis points increase in interest rates at balance sheet date would have increased profit
or loss, and equity, by approximately €47.0 million (2020: €51.7 million); a 100 basis points
decrease in interest rates would have decreased profit or loss, and equity, by approximately
€47.0 million (2020: €51.7 million). These scenarios assume our entire cash portfolio would
immediately reprice at the new interest rates.
Foreign exchange risk
We are exposed to foreign exchange risk arising from various currency exposures. Our principal
functional currency is euro, but we receive payments from our main collaboration partner Gilead
in U.S. dollars and acquire some consumables and materials in U.S. dollars, Swiss francs, and GB
pounds.
To limit this risk, we attempt to align incoming and outgoing cash flows in currencies other than
EUR. In addition, contracts closed by our different entities are mainly in the functional currencies
of that entity, except for the alliance agreement signed with Gilead for which payments are
denominated in U.S. dollars.
The exchange rate risk in case of a 10% change in the exchange rate amounts to:
Net book value (thousands of €)
Increase in Euros - U.S. Dollars
Increase in Euros - GB Pounds
Increase in Euros - CH Francs
31 December
2021
2020
(83,996)
(116,690)
1,093
233
303
2,013
The exchange rate risk on the U.S. dollar is primarily related to our cash and cash equivalents
and current financial investments held in U.S. dollars.
Capital risk factors
We manage our capital to safeguard that we will be able to continue as a going concern. At
the same time, we want to ensure the return to our shareholders through the results from our
research and development activities.
Our capital structure consists of current financial
investments, cash and cash equivalents,
financial debt (as of 31 December 2021, we only have leasing liabilities), and equity attributed to
the holders of our equity instruments, such as capital, reserves and results carried forward, as
mentioned in the consolidated statement of changes in equity.
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FINANCIAL STATEMENTS
We manage our capital structure and make the necessary adjustments in the light of changes
of economic circumstances, the risk characteristics of underlying assets and the projected cash
needs of the current research and development activities.
The adequacy of the capital structure will depend on many factors, including scientific progress in
the research and development programs, the magnitude of those programs, the commitments
to existing and new clinical CROs, the ability to establish new alliance or collaboration
agreements, the capital expenditures, the new commercial activities, market developments and
any future acquisition.
Neither Galapagos NV nor any of its subsidiaries are subject to any externally imposed capital
requirements, other than those imposed by generally applicable company law requirements.
34. Statutory auditor’s remuneration
The statutory auditor’s fees for carrying out its mandate at group level amounted to €860.3
thousand in 2021 (2020: €1,202.8 thousand). Audit-related fees, which generally the auditor
provides, amounted to €101.1 thousand in 2021 (2020: €214.4 thousand). Other fees related
to non-audit services executed by the statutory auditor amounted to €0 in 2021 (2020: €47.7
thousand). Other fees related to non-audit services executed by persons related to the statutory
auditor amounted to €587.7 thousand in 2021 and related to advisory services in relation to
IT and quality management (2020: €890.7 thousand). The audit committee and the supervisory
board are of the opinion that these non-audit services do not affect the independence of the
statutory auditor in the performance of his audit. The abovementioned additional fees were fully
approved by the audit committee in accordance with article 3:64 of the Belgian Companies Code.
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FINANCIAL STATEMENTS
35. Events after balance sheet date
On 13 January 2022, the supervisory board approved Subscription Right Plan 2022 (A) within
the framework of the authorized capital. Under this subscription right plan 30,000 subscription
rights were offered and accepted by the beneficiary of the plan. The subscription rights have an
exercise term of eight years as of the date of the offer and have an exercise price of €46.18
(the closing price of the share on Euronext Amsterdam and Brussels on the day preceding the
date of the offer). The subscription rights are not transferable. Subscription rights under this plan
vest in instalments: with 25% of each grant being exercisable as of 1 January 2023, 25% as of
1 January 2024 and 50% (the remainder) as of 1 January 2025.
On 26 January 2022, the supervisory board approved Subscription Right Plan 2022 (B) for the
benefit of a new member of the personnel of Galapagos within the framework of the authorized
capital. Under this subscription right plan 1,000,000 subscription rights were created, subject to
acceptance, and offered to the beneficiary of the plan. The subscription rights have an exercise
term of eight years as of the date of the offer and have an exercise price of €50. The subscription
rights can in principle not be exercised prior to 1 January 2026.
On 18 March 2022, 95,500 subscription rights were exercised (with an average exercise price of
€22.61 per subscription right), of which 50,000 subscription rights were exercised by our CEO
and 10,000 subscription rights by one member of our management board. This resulted in a
share capital increase (including issuance premium) of €2,159,600.00 and the issuance of 95,500
new ordinary shares. The closing price of our share on 18 March 2022 was €57.38.
Our consolidated financial statements were approved by the supervisory board and authorized
for publication on 22 March 2022. They were signed on behalf of the supervisory board by:
(signed)
Raj Parekh
Chair of the supervisory board
Howard Rowe
Chair of the audit committee
22 March 2022
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FINANCIAL STATEMENTS
Non-consolidated financial statements
Income statement
(thousands of €)
Turnover
Year ended 31 December
2021
2020
503,390
558,798
Inventory semi-finished and finished goods : increase (decrease)
1,376
-
Internally generated intangible assets
Other operating income
392,744
460,802
18,535
17,407
Operating income
916,046
1,037,007
Raw materials, consumables and goods for resale
(13,058)
(10,349)
Services and other goods
(500,012)
(543,041)
Remuneration, social security costs and pensions
(70,360)
(59,947)
Depreciation, impairment and other amounts written off on
constitution costs, intangible and tangible assets
(401,835)
(467,807)
Increase (-)/decrease in provisions
Other operating charges
Non-recurring operating costs
2,317
(11,210)
(120,704)
(53,495)
(4,068)
(105)
Operating loss
(191,674)
(108,947)
Finance income
Non-recurring finance income
Finance cost
Non-recurring finance cost
85,765
33,471
25,787
5,476
(28,125)
(139,863)
(12,330)
-
Loss before tax
(112,893)
(217,548)
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FINANCIAL STATEMENTS
(thousands of €)
Taxes
Year ended 31 December
2021
2020
20,156
21,577
Loss for the year
(92,737)
(195,971)
Loss brought forward
(276,499)
(80,528)
Accumulated losses to be carried forward
(369,237)
(276,499)
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FINANCIAL STATEMENTS
Balance sheet
(thousands of €)
Assets
Non-current assets
Intangible fixed assets
Tangible fixed assets
Financial fixed assets
Non-current trade and other receivables
Current assets
Inventories
Trade and other receivables
Deferred costs
Accrued income
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Share capital and reserves
Share premium account
Accumulated losses
Liabilities
Non-current liabilities
Provisions
Other non-current liabilities
Current liabilities
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Galapagos NV Annual Report 2021
31 December
2021
2020
199,804
258,820
48,290
15,697
43,317
92,500
54,806
14,544
61,183
128,287
4,920,628
5,340,351
20,361
355
209,445
207,387
8,677
847
9,723
572
4,681,298
5,122,314
5,120,433
5,599,171
2,639,924
2,729,348
354,582
353,819
2,654,579
2,652,028
(369,237)
(276,499)
2,480,508
2,869,823
10,385
8,885
1,500
11,211
11,211
-
2,470,123
2,858,613
FINANCIAL STATEMENTS
(thousands of €)
Trade and other payables
Tax, payroll and social security liabilities
Accrued costs
Deferred income
Total equity and liabilities
31 December
2021
2020
223,911
217,868
16,705
3,100
12,780
1,149
2,226,407
2,626,816
5,120,433
5,599,171
The non-consolidated annual accounts of Galapagos NV were prepared in accordance with
Belgian accounting rules as well as with the legal and regulatory requirements. They show
a negative result. The financial year 2021 closed with a loss of €92.7 million compared to a
loss of €196.0 million in 2020. The non-consolidated annual accounts of Galapagos NV show
accumulated losses of €369.2 million as at 31 December 2021; we refer to the Going concern
statement for justification for the application of the valuation rules under the going concern
assumption.
Following common practice, Galapagos NV has given customary representations and warranties
which are capped and limited in time.
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REPORT OF THE STATUTORY AUDITOR
Report of the statutory auditor
Statutory auditor’s report to the shareholders’
meeting of Galapagos NV for the year ended 31
December 2021 – Consolidated financial statements
The original text of this report is in Dutch
In the context of the statutory audit of the consolidated financial statements of Galapagos NV
(“the company”) and its subsidiaries (jointly “the group”), we hereby submit our statutory audit
report. This report includes our report on the consolidated financial statements and the other
legal and regulatory requirements. These parts should be considered as integral to the report.
We were appointed in our capacity as statutory auditor by the shareholders’ meeting of 28 April
in accordance with the proposal of the board of directors, now supervisory board
2020,
(“bestuursorgaan” / “organe d’administration”)
issued upon recommendation of the audit
committee. Our mandate will expire on the date of the shareholders’ meeting deliberating on the
financial statements for the year ending 31 December 2022. We have performed the statutory
audit of the consolidated financial statements of Galapagos NV for 16 consecutive periods. We
are the statutory auditor of Galapagos NV for 22 consecutive years.
Report on the consolidated financial statements
Unqualified opinion
We have audited the consolidated financial statements of the group, which comprise the
consolidated statement of financial position as at 31 December 2021,
the consolidated
statement of income and comprehensive income/loss, the consolidated statement of changes in
equity and the consolidated cash flow statement for the year then ended, as well as the summary
of significant accounting policies and other explanatory notes. The consolidated statement of
financial position shows total assets of 5 193 160 (000) EUR and the consolidated statement
of income and comprehensive income/loss shows a loss for the year then ended of 103
231 (000) EUR.
In our opinion, the consolidated financial statements give a true and fair view of the group’s
net equity and financial position as of 31 December 2021 and of its consolidated results and
its consolidated cash flow for the year then ended, in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory
requirements applicable in Belgium.
Basis for the unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISA), as
applicable in Belgium. In addition, we have applied the International Standards on Auditing
approved by the IAASB applicable to the current financial year, but not yet approved at national
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REPORT OF THE STATUTORY AUDITOR
level. Our responsibilities under those standards are further described in the “Responsibilities of
the statutory auditor for the audit of the consolidated financial statements” section of our report.
We have complied with all ethical requirements relevant to the statutory audit of consolidated
financial statements in Belgium, including those regarding independence.
We have obtained from the supervisory board and the company’s officials the explanations and
information necessary for performing our audit.
We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for
our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Determination of the estimated costs impacting the percentage of completion used for
revenue recognition related to the license and collaboration agreement for filgotinib – Refer
to Notes 2, 4, 6, and 25 to the consolidated financial statements
Key Audit Matter Description
As described in notes 2, 4, 6 and 25 to the consolidated financial statements, the company
recognized collaboration revenues of 235,7 million EUR in 2021 from upfront payments and
milestone payments in relation to the Gilead collaboration agreement for filgotinib (the
“agreement”). For this filgotinib performance obligation, the company recognized revenue using
the cost-to-cost input method, which management believes best depicts the transfer of control to
the customer, being Gilead. Under the cost-to-cost input method, the extent of progress towards
completion is measured based on the ratio of actual costs incurred to the total estimated costs
expected upon satisfying the filgotinib performance obligation.
Significant management judgment is required in determining the total estimated costs required
under the agreement and the period over which the company is expected to complete its
performance obligation. This significant estimate is the principal consideration for our conclusion
the estimated costs to complete the
that procedures relating to the determination of
performance obligation,
impacting the revenue recognition of the filgotinib performance
obligation is a key audit matter. This increased level of judgment by management led to a high
degree of auditor judgment, complexity, and effort in performing procedures and in evaluating
audit evidence related to management’s assumptions related to the estimation of total costs to
complete.
How the Key Audit Matter Was Addressed in the Audit
Our procedures included testing the effectiveness of controls relating to the revenue recognition
process, including controls over the actual costs incurred to date and controls over the inputs
and assumptions used to estimate the total costs required to complete the performance
obligation, as well as increasing the nature and extent of our audit procedures where such
controls were not operating effectively.
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These procedures included, among others (i) evaluating and testing management’s process for
determining the estimate of total costs to complete the performance obligation, which included
evaluating the reasonableness of significant assumptions related to the estimate, and (ii) testing,
on a sample basis, the actual costs incurred to date.
Our procedures on the reasonableness of the assumptions used also included evaluating
management’s ability to reasonably estimate costs to complete the performance obligation
by (i) evaluating the appropriateness of changes made during the period to management’s
estimates of total costs to complete; (ii) performing a comparison of management’s prior period
cost estimates to actual costs incurred and approved; (iii) evaluating the period over which
management is expecting the company to complete its performance obligation; (iv) comparing
certain costs to third-party supporting evidence, and (v) performing sensitivities on the current
year’s revenue recognition resulting from changes to these estimates.
Responsibilities of the supervisory board for the preparation
of the consolidated financial statements
The supervisory board is responsible for the preparation and fair presentation of
the
consolidated financial statements in accordance with International Financial Reporting Standards
(IFRS) as adopted by the European Union and with the legal and regulatory requirements
applicable in Belgium and for such internal control as the supervisory board determines is
necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the supervisory board is responsible for
assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters
to be considered for going concern and using the going concern basis of accounting unless the
supervisory board either intends to liquidate the group or to cease operations, or has no other
realistic alternative but to do so.
Responsibilities of the statutory auditor for the audit of the
consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue a statutory auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of these consolidated financial
statements.
During the performance of our audit, we comply with the legal, regulatory and normative
framework as applicable to the audit of consolidated financial statements in Belgium. The scope
of the audit does not comprise any assurance regarding the future viability of the company nor
regarding the efficiency or effectiveness demonstrated by the supervisory board in the way that
the company’s business has been conducted or will be conducted.
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As part of an audit in accordance with ISA, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
identify and assess the risks of material misstatement of
the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from an error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control;
obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the group’s internal control;
evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the supervisory board;
conclude on the appropriateness of the use of the going concern basis of accounting by the
supervisory board and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our statutory auditor’s report to the related disclosures in
the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our
statutory auditor’s report. However, future events or conditions may cause the group to
cease to continue as a going concern;
evaluate the overall presentation, structure and content of the consolidated financial
statements, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
obtain sufficient appropriate audit evidence regarding the financial information of the entities
and business activities within the group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the audit committee regarding, amongst other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant
ethical requirements regarding independence, and we communicate with them about all
relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated to the audit committee, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our report unless law or
regulation precludes any public disclosure about the matter.
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Other legal and regulatory requirements
Responsibilities of the supervisory board
The supervisory board is responsible for the preparation and the content of the directors’ report
on the consolidated financial statements, the statement of non-financial information attached to
the directors’ report on the consolidated financial statements and other matters disclosed in the
annual report on the consolidated financial statements.
Responsibilities of the statutory auditor
As part of our mandate and in accordance with the Belgian standard complementary to the
International Standards on Auditing (ISA) as applicable in Belgium, our responsibility is to verify,
in all material respects, the director’s report on the consolidated financial statements, the
statement of non-financial information attached to the directors’ report on the consolidated
financial statements and other matters disclosed in the annual report on the consolidated
financial statements, as well as to report on these matters.
Aspects regarding the directors’ report on the consolidated
financial statements and other information disclosed in the
annual report on the consolidated financial statements
In our opinion, after performing the specific procedures on the directors’ report on the
consolidated financial statements, this report is consistent with the consolidated financial
statements for that same year and has been established in accordance with the requirements of
article 3:32 of the Code of companies and associations.
In the context of our statutory audit of the consolidated financial statements we are responsible
to consider, in particular based on information that we became aware of during the audit, if
the directors’ report on the consolidated financial statements and other information disclosed in
the annual report on the consolidated financial statements, are free of material misstatements,
either by information that is incorrectly stated or otherwise misleading. In the context of the
procedures performed, we are not aware of such a material misstatement.
The non-financial information as required by article 3:32, § 2 of the Code of companies and
associations, has been disclosed in the directors’ report on the consolidated financial statements
that is part of the section on corporate social responsibility of the annual report (section “CSR
Report”). This non-financial information has been established by the company in accordance with
the United Nations’ Sustainable Development Goals (“SDG’s”). In accordance with article 3:80 § 1,
5° of the Code of companies and associations we do not express any opinion on the question
whether this non-financial information has been established in accordance with these SDG’s.
Statements regarding independence
Our audit firm and our network have not performed any prohibited services and our audit
firm has remained independent from the group during the performance of our mandate.
The fees for the additional non-audit services compatible with the statutory audit, as defined
in article 3:65 of the Code of companies and associations, have been properly disclosed and
disaggregated in the notes to the consolidated financial statements.
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Single European Electronic Format (ESEF)
In accordance with the draft standard on the audit of the compliance of the financial statements
with the Single European Electronic Format (“ESEF”), we have also performed the audit of the
compliance of the ESEF format and of the tagging with the technical regulatory standards as
defined by the European Delegated Regulation No. 2019/815 of 17 December 2018 (“Delegated
Regulation”).
in accordance with the ESEF
The supervisory board is responsible for the preparation,
requirements, of the consolidated financial statements in the form of an electronic file in ESEF
format (“digital consolidated financial statements”) included in the annual financial report.
Our responsibility is to obtain sufficient and appropriate evidence to conclude that the format
and the tagging of the digital consolidated financial statements comply, in all material respects,
with the ESEF requirements as stipulated by the Delegated Regulation.
Based on our work, in our opinion, the format and the tagging of information in the official Dutch
version of the digital consolidated financial statements included in the annual financial report of
Galapagos NV as of 31 December 2021 are, in all material respects, prepared in accordance with
the ESEF requirements as stipulated by the Delegated Regulation.
Other statements
This report is consistent with our additional report to the audit committee referred to in
article 11 of Regulation (EU) No 537/2014.
Signed at Zaventem, March 24, 2022.
The statutory auditor
Deloitte Bedrijfsrevisoren/Réviseurs d’Entreprises BV/SRL
Represented by Nico Houthaeve
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Glossary
100 points clinical response
Percentage of patients achieving a 100-point decrease in CDAI score during a clinical trial in CD
patients
ACR
American College of Rheumatology
ACR20 (ACR 20/50/70)
American College of Rheumatology 20% response rate signifies a 20% or greater improvement
in the number of swollen and tender joints as well as a 20% or greater improvement in three
out of five other disease-activity measures. ACR50 and ACR70 reflect the same, for 50% and 70%
response rates, respectively
ADPKD
Autosomal dominant polycystic kidney disease, a disease where typically both kidneys become
enlarged with fluid-filled cysts, leading to kidney failure. Other organs may be affected as well
ADS
American Depositary Share; Galapagos has a Level 3 ADS listed on Nasdaq with ticker symbol
GLPG and CUSIP number 36315X101. One ADS is equivalent to one ordinary share in Galapagos
NV
AFM
Dutch Authority for the Financial Markets
Anemia
Condition in which the patient has an inadequate number of red blood cells to carry oxygen to
the body’s tissues
Anti-TNF
Tumor necrosis factor. An anti-TNF drug acts by modulation of TNF
Assays
Laboratory tests to determine characteristics
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Attrition rate
The historical success rate for drug discovery and development, based on publicly known
development paths. Statistically seen,
investment in at least 12 target-based programs is
required to ensure that at least one of these will reach a Phase 3 study. Most new drug R&D
programs are discontinued before reaching Phase 3 because they are not successful enough to
be approved
BID dosing
Twice-daily dosing (bis in die)
Bioavailability
Assessment of the amount of product candidate that reaches a body’s systemic circulation after
(oral) administration
Biomarker
Substance used as an indicator of a biological process, particularly to determine whether a
product candidate has a biological effect
Black & Scholes model
A mathematical description of financial markets and derivative investment instruments that is
widely used in the pricing of European options and subscription rights
Bridging trial
Clinical trial performed to "bridge" or extrapolate one dataset to that for another situation, i.e. to
extrapolate data from one population to another for the same drug candidate, or to move from
IV to subcutaneous dosing
CALOSOMA
Phase 1 program with GLPG3970 in psoriasis
CDAI
Crohn’s Disease Activity Index, evaluating patients on eight different factors, each of which has a
pre-defined weight as a way to quantify the impact of CD
CDAI remission
In the FITZROY trial, the percentage of patients with CD who showed a reduction of CDAI score to
<150
CFTR
Cystic fibrosis transmembrane conductance regulator (CFTR) is a membrane protein and chloride
channel in vertebrates that is encoded by the CFTR gene. It is hypothesized that inhibition of the
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CFTR channel might reduce cyst growth and enlargement for patients with ADPKD. GLPG2737 is
a CFTR inhibitor
CHIT1/AMCase
Chitotriosidase (CHIT1) is a protein coding gene, and AMCase is an inactive acidic mamalian
chitinase. CHIT1 is predominantly involved in macrophage activation.
Inhibition of chitinase
activity translates into a potential therapeutic benefit in lung diseases like IPF, as shown in
preclinical models. GLPG4716 is a CHIT1/AMCase inhibitor targeting a key pathway in tissue
remodeling
CHMP
Committee for Medicinal Products for Human Use is the European Medicines Agency's (EMA)
committee responsible for human medicines and plays a vital role in the authorization of
medicines in the European Union (EU)
CIR
Crédit d’Impôt Recherche, or research credit. Under the CIR, the French government refunds
up to 30% of the annual investment in French R&D operations, over a period of three years.
Galapagos benefits from the CIR through its operations in Romainville, just outside Paris
CRP
C-reactive protein is a protein found in the blood, the levels of which rise in response to
inflammation
Cash position
Current financial investments and cash and cash equivalents
Chitinase
Chitinase is an enzyme that degrades chitin, involved in the human innate immunity. Inhibition of
chitinase activity translates into a potential therapeutic benefit in lung diseases like IPF, as shown
in preclinical models
Clinical Proof of Concept (PoC)
Point in the drug development process where the product candidate first shows efficacy in a
therapeutic setting
Complete Response Letter (CRL)
A letter send by the FDA to indicate that the review cycle for an application is complete and the
application is not ready for approval in its present form
Compound
A chemical substance, often a small molecule with drug-like properties
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Contract research organization (CRO)
Organization which provides drug discovery and development services to the pharmaceutical,
biotechnology and medical devices industry
Corticosteroids
Any of a group of steroid hormones produced in the adrenal cortex or made synthetically. They
have various metabolic functions and some are used to treat inflammation
Crohn's disease (CD)
An IBD involving inflammation of the small and large intestines, leading to pain, bleeding, and
ultimately in some cases surgical removal of parts of the bowel
Cytokine
A category of small proteins which play important roles in signaling in processes in the body
DARWIN
Phase 2 program for filgotinib in RA. DARWIN 1 explored three doses, in twice-daily and once-
daily administration, for up to 24 weeks in RA patients with insufficient response to methotrexate
(MTX) and who remained on their stable background treatment with MTX. DARWIN 2 explored
three once-daily doses for up to 24 weeks in RA patients with insufficient response to
methotrexate (MTX) and who washed out of their treatment with MTX. DARWIN 1 and 2 were
double-blind, placebo-controlled trials which recruited approximately 900 patients globally and
for which results were reported in 2015. DARWIN 3 is a long term extension trial in which all
patients are on 200 mg filgotinib, except for U.S. males who are on 100 mg. The week 156 results
from DARWIN 3 were reported in 2019
DAS28 (CRP)
DAS28 is an RA Disease Activity Score based on a calculation that uses tender and swollen joint
counts of 28 defined joints, the physician’s global health assessment and a serum marker for
inflammation, such as C- reactive protein. DAS28 (CRP) includes the C-reactive protein score
calculation: scores range from 2.0 to 10.0, with scores below 2.6 being considered remission
DDI study
Drug-drug interaction study. This type of study will assess if there is a change in the action or side
effects of a drug caused by concomitant administration with another drug
DIVERGENCE
Phase 2 programs with filgotinib in Crohn's disease. DIVERGENCE 1 was an exploratory study in
small bowel CD and DIVERGENCE 2 in fistulizing CD
DIVERSITY
Phase 3 program evaluating filgotinib in CD
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DMARDs
Disease modifying anti rheumatic drugs; these drugs address the disease itself rather than just
the symptoms
Deep venous thrombosis (DVT)
The formation of one or more blood clots in one of the body's large veins, most commonly in the
lower limbs. The blood clots can travel to the lung and cause a pulmonary embolism
Degradation
The process by which proteins are lost through the use of drugs such as PROTACs or small
molecules
Development
All activities required to bring a new drug to the market. This includes preclinical and clinical
development research, chemical and pharmaceutical development and regulatory filings of
product candidates
Discovery
Process by which new medicines are discovered and/or designed. At Galapagos, this is the
department that oversees target and drug discovery research through to nomination of
preclinical candidates
Disease-modifying
Addresses the disease itself, modifying the disease progression, not just the symptoms of the
disease
Dose-range finding study
Phase 2 clinical study exploring the balance between efficacy and safety among various doses of
treatment in patients. Results are used to determine doses for later studies
Double-blind
Term to characterize a clinical trial in which neither the physician nor the patient knows if the
patient is taking placebo or the treatment being evaluated
EC
European Commission
EMA
European Medicines Agency, in charge of European market authorization of new medications
Efficacy
Effectiveness for intended use
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Endoscopy
A non-surgical procedure involving use of an endoscope to examine a person’s digestive tract
FDA
The U.S. Food and Drug Administration is an agency responsible for protecting and promoting
public health and in charge of American market approval of new medications
FIH
First-in-human clinical trial, usually conducted in healthy volunteers with the aim to assess the
safety, tolerability and pharmacokinetics of the product candidate
FILOSOPHY
Phase 4 program evaluating filgotinib in RA
FINCH
Phase 3 program evaluating filgotinib in RA
FITZROY
A double-blind, placebo controlled Phase 2 trial with filgotinib in 177 CD patients for up to 20
weeks. Full results were published in The Lancet in 2016
FORM 20-F
Form 20-F is an SEC filing submitted to the US Securities and Exchange Commission
FSMA
The Belgian market authority: Financial Services and Markets Authority, or Autoriteit voor
Financiële Diensten en Markten
FTE
Full-time equivalent; a way to measure an employee’s involvement in a project. For example, an
FTE of 1.0 means that the equivalent work of one full-time worker was used on the project
Fast Track
A designation by the FDA of an investigational drug for expedited review to facilitate development
of drugs which treat a serious or life-threatening condition and fill an unmet medical need
Fee-for-service
Payment system where the service provider is paid a specific amount for each procedure or
service performed
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Filgotinib
Formerly known as GLPG0634, commercial name is Jyseleca. Small molecule preferential JAK1
inhibitor, approved in RA in European Union, Great Britain, and Japan, and in UC in European
Union and Great Britain. Application for approval for ulcerative colitis was filed in Japan. Filgotinib
is partnered with Gilead. Filgotinib currently is in Phase 3 trials in CD, and in a Phase 4 trial in RA
Fistulizing CD
Fistulae are inflammatory tracts that most often occur between the distal colon and the perianal
region. Fistulae are one of the most severe sequelae of luminal CD and the lifetime risk of
occurrence is close to 50% of those with active CD
Futility analysis
Analysis of the likelihood of a trial to meet its primary endpoint, based on a subset of the total
information to be gathered. The term 'futility' is used to refer to the low likelihood of a clinical trial
to achieve its objectives. In particular, stopping a clinical trial when the interim results suggest
that it is unlikely to achieve statistical significance can save resources that could be used on more
promising research
G&A expenses
General & administrative expenses
GLIDER
Phase 2 Proof of Concept trial with SIK2/3 inhibitor GLPG3970 in Sjögren's syndrome
GLPG0555
A JAK1 inhibitor currently in Phase 1b in osteoarthritis
GLPG0634
Molecule number currently known as filgotinib and Jyseleca
GLPG1690
Autotaxin inhibitor discovered by us and currently known as ziritaxestat. All development with
ziritaxestat was discontinued in February 2021
GLPG2737
A compound currently in Phase 2 in ADPKD. This compound is part of the CF collaboration with
AbbVie but Galapagos retained rights outside of CF
GLPG3121
A compound currently in Phase 1 targeting JAK1/TYK2 directed toward inflammation (IBD)
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GLPG3667
A TYK2 kinase inhibitor discovered by us, topline results from the Phase 1b in psoriasis reported
in July 2021
GLPG3970
A SIK2/3 inhibitor currently in multiple Phase 2 Proof of Concept studies. Topline results from the
studies in UC, psoriasis and RA reported in July 2021
GLPG4399
A SIK3 inhibitor currently in Phase 1 directed toward inflammation
GLPG4586
A compound with undisclosed mode of action currently in the preclinical phase directed toward
fibrosis. This is the first preclinical candidate to emerge from the collaboration with Fibrocor
GLPG4605
A SIK2/3 inhibitor in the preclinical phase, currently directed toward fibrosis
GLPG4716
A chitinase inhibitor inlicensed from OncoArendi in preparation for Phase 2 in IPF
Genome
An organism's complete set of genetic information needed to build that organism and allow it to
grow and develop
HDL
High-density lipoprotein. HDL scavenges and reduces low-density lipoprotein (LDL) which
contributes to heart disease at high levels. High levels of HDL reduce the risk for heart disease,
while low levels of HDL increase the risk of heart disease
Hemoglobin
A protein inside red blood cells that carries oxygen from the lungs to tissues and organs in the
body and carries carbon dioxide back to the lungs
Histology
Study of the microscopic structures of tissues
Histopathology
Microscopic examination of tissues for manifestations of a disease
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IBD
Inflammatory Bowel Disease. This is a general term for an autoimmune disease affecting the
bowel, including CD and UC. CD affects the small and large intestine, while UC affects the large
intestine. Both diseases involve inflammation of the intestinal wall, leading to pain, bleeding, and
ultimately, in some cases, surgical removal of part of the bowel
IPF
Idiopathic pulmonary fibrosis. A chronic and ultimately fatal disease characterized by a
progressive decline in lung function. Pulmonary fibrosis involves scarring of lung tissue and is
the cause of shortness of breath. Fibrosis is usually associated with a poor prognosis. The term
“idiopathic” is used because the cause of pulmonary fibrosis is still unknown
In vitro
Studies performed with cells outside their natural context, for example in a laboratory
In vivo
Studies performed with animals in a laboratory setting
In-/out-licensing
Receiving/granting permission from/to another company or institution to use a brand name,
patent, or other proprietary right, in exchange for a fee and/or royalty
Inflammatory diseases
A large, unrelated group of disorders associated with abnormalities in inflammation
Intellectual property
Creations of the mind that have commercial value and are protected or protectable, including by
patents, trademarks or copyrights
Intersegment
Occurring between the different operations of a company
Investigational New Drug (IND) Application
United States Federal law requires a pharmaceutical company to obtain an exemption to ship
investigators, before a marketing
an experimental drug across state lines, usually to clinical
application for the drug has been approved. The IND is the means by which the sponsor obtains
this exemption, allowing them to perform clinical studies
JAK
Janus kinases (JAK) are critical components of signaling mechanisms utilized by a number of
cytokines and growth factors, including those that are elevated in RA. Filgotinib is a preferential
JAK1 inhibitor
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Jyseleca®
Jyseleca® is the brand name for filgotinib
LADYBUG
Phase 2 program with GLPG3970 in rheumatoid arthritis
LDL
Low-density lipoprotein. LDL contributes to heart disease at high levels
Lipoprotein
Lipoproteins are substances made of protein and fat that carry cholesterol through your
bloodstream. There are two main types of cholesterol: High-density lipoprotein (HDL), or "good"
cholesterol and Low-density lipoprotein (LDL), or "bad" cholesterol
Liver enzymes
Inflamed or injured liver cells secrete higher than normal amounts of certain chemicals, including
liver enzymes, into the bloodstream
Lymphocyte
Type of white blood cell that is part of the immune system
MACE
Major adverse cardiovascular events; a composite endpoint frequently used in cardiovascular
research
MANGROVE
Phase 2 program with GLPG2737 in autosomal dominant polycystic kidney disease
MANTA
A Phase 2 semen parameter trial with filgotinib in male patients with CD or UC
MANTA-RAy
Phase 2 semen parameter trial with filgotinib in male patients with RA, PsA, or AS
MHLW
Japanese Ministry of Health, Labor and Welfare (MHLW),
authorization of new medications
in charge of
Japanese market
MHRA
Medicines and Healthcare products Regulatory Agency in Great Britain
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MTX
Methotrexate; a first-line therapy for inflammatory diseases
Mayo Score
Mayo Score is a Disease Activity Score for ulcerative colitis. It is a composite of subscores
from four categories,
rectal bleeding, findings of flexible
frequency,
proctosigmoidoscopy or colonoscopy, and physician's global assessment, with a total score
ranging from 0–12
including stool
Milestone
Major achievement in a project or program; in our alliances, this is usually associated with a
payment
Modulation
The process by which the function of proteins is changed through the use of drugs such as small
molecules, peptides, antibodies or cell therapy
Molecule collections
Chemical libraries, usually consisting of drug-like small molecules that are designed to interact
with specific target classes. These collections can be screened against a target to generate initial
“hits” in a drug discovery program
NDA
New Drug Application
NICE
The National Institute for Health and Care Excellence; an independent public body that provides
national guidance and advice to improve health and social care in the UK
NK cells
Natural killer cells, type of white blood cell with granules of enzymes which can attack tumors or
viruses
Neutrophil
Type of immune system cell which is one of the first cell types to travel to the site of an infection
in the body. Neutrophils are another type of white blood cell which fight infection by ingesting
and killing microorganisms
Oligonucleotide
Short DNA or RNA molecule that can be used as research tools or therapeutic drug to change
protein expression
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Oral dosing
Administration of medicine by the mouth, either as a solution or solid (capsule, pill) form
Osteoarthritis (OA)
The most common form of arthritis, usually occurring after middle age, marked by chronic
breakdown of cartilage in the joints leading to pain, stiffness, and swelling
Outsourcing
Contracting work to a third party
PASI
Psoriasis Area and Severity Index; an index used to express the severity of psoriasis. It combines
the severity (erythema, induration and desquamation) and percentage of affected area
PRAC
Pharmacovigilance Risk Assessment Committee of the European Medicines Agency, responsible
for assessing all aspects of risk management of human medicines
PROTAC
Proteolysis targeting chimera, a special small molecule capable of removing unwanted proteins
that play a role in disease processes
Pharmacokinetics (PK)
Study of what a body does to a drug; the fate of a substance delivered to a body. This includes
absorption, distribution to the tissues, metabolism and excretion. These processes determine
the blood concentration of the drug and its metabolite(s) as a function of time from dosing
Phase 1
First stage of clinical testing of an investigational drug designed to assess the safety and
tolerability, pharmacokinetics of a drug, usually performed in a small number of healthy human
volunteers
Phase 2
Second stage of clinical testing, usually performed in no more than several hundred patients, in
order to determine efficacy, tolerability and the dose to use
Phase 3
Large clinical trials, usually conducted in several hundred to several thousand patients to gain a
definitive understanding of the efficacy and tolerability of the candidate treatment; serves as the
principal basis for regulatory approval
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Phenotypic screening
Phenotypic screening is a strategy used in drug discovery to identify molecules with the ability
to alter a cell’s disease characteristics. Animal models and cell-based assays are both strategies
In contrast to target-based drug discovery, phenotypic
used to identify these molecules.
screening does not rely on knowing the identity of the specific drug target or its hypothetical
role in the disease. A key benefit this approach has over target-based screening, is its capacity to
capture complex biological mechanisms that are not otherwise achievable
Pivotal trials
Registrational clinical trials
Placebo
A substance having no pharmacological effect but administered as a control
biologically active preparation
in testing a
Preclinical
Stage of drug research development, undertaken prior to the administration of the drug to
humans. Consists of in vitro and in vivo screening, pharmacokinetics, toxicology, and chemical
upscaling
Preclinical candidate (PCC)
A new molecule and potential drug that meets chemical and biological criteria to begin the
development process
Product candidate
Substance that has satisfied the requirements of early preclinical testing and has been selected
for development, starting with formal preclinical safety evaluation followed by clinical testing for
the treatment of a certain disorder in humans
Proof of Concept (POC)
A clinical trial in which first evidence for efficacy of a candidate drug is gathered. A Proof of
Concept trial is usually with a small number of patients and for short duration to get a first
impression of drug activity
Proof of Concept study
Phase 2 patient study in which activity as well as safety in patients is evaluated, usually for a new
mechanism of action
Psoriasis
A chronic skin disease which results in scaly, often itchy areas in patches
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Psoriatic arthritis (PsA)
Psoriatic arthritis or PsA is an inflammatory form of arthritis, affecting up to 30% of psoriasis
patients. Psoriatic arthritis can cause swelling, stiffness and pain in and around the joints, and
cause nail changes and overall fatigue
Pulmonary embolism
A blockage in one of the pulmonary arteries in the lungs
QD dosing
Once-daily dosing (qd from the Latin quaque die)
R&D operations
Research and development operations; unit responsible for discovery and developing new
product candidates for internal pipeline or as part of risk/reward sharing alliances with partners
Replication
The process by which DNA is copied to produce two identical DNA molecules during the process
of cell division
Rheumatoid arthritis (RA)
A chronic, systemic inflammatory disease that causes joint inflammation, and usually leads to
cartilage destruction, bone erosion and disability
S&M expenses
Sales and marketing expenses
SEA TURTLE
Phase 2 program with GLPG3970 in ulcerative colitis
SEC
Securities and Exchange Commission in the US
SELECTION
Phase 3 program evaluating filgotinib in UC patients. Full results were published in The Lancet in
2021
SES-CD scores
Simple endoscopic score for CD, involving review of five pre-defined bowel segments, assigning
values from 0 (unaffected) to 3 (highly affected)
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SIK
Salt-inducible kinase. This is the target family for the portfolio of molecules in the Toledo program
Screening
Method usually applied at the beginning of a drug discovery campaign, where a target is tested
in a biochemical assay against a series of small molecules or antibodies to obtain an initial set of
“hits” that show activity against the target. These hits are then further tested or optimized
Short interfering RNA
A research tool that is used to silence the activity of specific genes
Sjögrens syndrome
Sjögren’s Syndrome is a systemic inflammatory disease which can be felt throughout the body,
often resulting in chronic dryness of the eyes and mouth
Small bowel CD (SBCD)
CD causes chronic inflammation and erosion of the intestines. It can affect different regions of
gastrointestinal tract including the stomach and small and large intestines. While isolated SBCD is
an uncommon presentation of CD, involvement of some portion of the small bowel, particularly
the ileum, is common
Statin
Statins are a class of lipid-lowering medications that reduce illness and mortality in those who
are at high risk of cardiovascular disease. They are the most common cholesterol-lowering
drugs. Low-density lipoprotein (LDL) carriers of cholesterol play a key role in the development of
atherosclerosis and coronary heart disease via the mechanisms described by the lipid hypothesis
Systemic lupus erythematosus
An autoimmune disease, with systemic manifestations including skin rash, erosion of joints or
even kidney failure
TAPINOMA
Phase 1b Proof of Concept trial with SIK2/3 inhibitor GLPG3970 in SLE. The study was terminated
in October 2021
TEAE
Treatment Emergent Adverse Event,
is any event not present prior to the initiation of the
treatments or any event already present that worsens in either intensity or frequency following
exposure to the treatments
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TYK
Tyrosine kinase is an enzyme that can transfer a phosphate group from ATP to the tyrosine
residues of specific proteins inside a cell. It functions as an "on" or "off" switch in many cellular
functions. Tyrosine kinases belong to a larger class of enzymes known as protein kinases which
also attach phosphates to other amino acids such as serine and threonine. GLPG3667 is a
reversible and selective TYK2 kinase domain inhibitor
Target
Proteïn that has been shown to play a role in a disease process and that forms the basis of a
therapeutic intervention or discovery of a medicine
Target discovery
Identification and validation of proteins that have been shown to play a role in a disease process
Technology access fee
License payment made in return for access to specific technology (e.g. compound or virus
collections)
Toledo
Toledo is the program name for the target family of SIK inhibitors
Topical corticosteroids
Corticosteroids which are administered through the skin using an ointment
Transcription
The process of making an RNA copy of a DNA gene sequence
Translation
The process by which a protein is synthetized from mRNA
Ulcerative colitis (UC)
UC is an IBD causing chronic inflammation of the lining of the colon and rectum (unlike CD with
inflammation throughout the gastrointestinal tract)
Venous thrombotic events
a
blood
When
called
a venous thromboembolism (VTE). The abbreviation DVT/PE refers to a VTE where a deep
vein thrombosis (DVT) has moved to the lungs (PE or pulmonary embolism)
breaks
travels
blood,
loose
and
clot
this
the
in
is
Ziritaxestat
Formerly known as GLPG1690. Ziritaxestat is a novel drug candidate targeting autotaxin; all
development with ziritaxestat was discontinued in February 2021
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OTHER INFORMATION
Financial calendar
26 April 2022
Annual Shareholders’ Meeting in Mechelen, Belgium
05 May 2022
First quarter 2022 results
04 August 2022
First half year 2022 results
03 November 2022
Third quarter 2022 results
23 February 2023
Full year 2022 results
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OTHER INFORMATION
Colophon
Concept, design and online programming
nexxar GmbH, Vienna – Online annual reports and online sustainability reports
www.nexxar.com
Photography
Frank van Delft
Richard Davies
Michael Liebert
Tom Whipps
Fernando Vázquez Morago
Frederik Beyens
Patient Charter video
Alive with ideas
Magazine Copy
Evelyn Fox
Gerard Ivall
Marina Sardone
Thecla Schreuders
Copy deadline: 22 March 2022
This report is also available in Dutch and available for download in the Downloads section of this
report or at www.glpg.com
283
Galapagos NV Annual Report 2021
OTHER INFORMATION
Contact
Sofie Van Gijsel
Sandra Cauwenberghs
Head of Investor Relations
Director of Investor Relations
Galapagos NV
Galapagos NV
Generaal De Wittelaan L11 A3
Generaal De Wittelaan L11 A3
2800 Mechelen, Belgium
2800 Mechelen, Belgium
Tel. +1 781 296 1143
Email: ir@glpg.com
Tel. +32 15 34 29 00
Email: ir@glpg.com
Marieke Vermeersch
Head of Corporate Communication
Galapagos NV
Generaal De Wittelaan L11 A3
2800 Mechelen, Belgium
Tel. +32 479 49 06 03
Email: communications@glpg.com
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