Purpose
Annual Report 2022
Forward with TABLE OF CONTENTS
Table of Contents
The Galapagos group
Corporate governance
Galapagos’ corporate governance policies ......90
Board of Directors of Galapagos NV .................93
Committees .....................................................106
Executive Committee of Galapagos NV ..........109
Galapagos NV’s share capital and shares .......116
Shareholders ...................................................120
Our remuneration policy .................................125
Remuneration report ......................................125
Conflict of interests and related parties .........145
Code of Business Conduct and Ethics ............147
Statement by the Board of Directors ..............148
Financial statements
Consolidated financial statements .................150
Notes to the consolidated financial
statements .......................................................156
Overview statutory results of Galapagos NV ..234
Report of the statutory auditor
Report of the statutory auditor .......................238
Other information
Glossary ...........................................................246
Financial calendar ...........................................264
Appendix tables – EU taxonomy .....................265
Colophon .........................................................273
Contact ............................................................274
Letter from the CEO and Chairman .................... 4
Our Company ...................................................... 7
Key achievements in 2022 .................................. 9
Potential external impacts ............................... 17
Going concern statement ................................. 19
Risk management and internal control ........... 20
Disclaimer and other information .................... 22
Portfolio
Portfolio and outlook 2023 ............................... 27
Immunology ...................................................... 29
Oncology ........................................................... 44
Risk factors
Risks related to commercialization .................. 53
Risks related to product development and
regulatory approval .......................................... 54
Risks related to our financial position and
need for additional capital ............................... 57
Risks related to our reliance on third
parties ................................................................ 58
Risks related to our competitive position ........ 61
Risks related to our intellectual property ........ 62
Risks related to our organization, structure
and operation .................................................... 63
Market risks relating to the Galapagos
shares ................................................................ 67
General statement about Galapagos’ risks ...... 68
Sustainability report
Letter from the CEO – Our Sustainability
Commitment – Forward, Sustainably .............. 70
Our Materiality Assessment .............................. 71
Our Ambition ..................................................... 73
Our Sustainability Governance ........................ 73
Our Pillars .......................................................... 76
Reporting on EU Taxonomy .............................. 87
2
Galapagos NV Annual Report 2022
The
Galapagos
group
Foreword from our CEO and Chairman
Overview of our company,
our strategy and 2022 achievements
Forward with Purpose
THE GALAPAGOS GROUP
Letter from the CEO and Chairman
As I reflect on my first year as the CEO and
Chairman of the Board of Directors of Galapagos,
we can be proud of what we have achieved in a
very short time to embrace and execute on a new
R&D strategy for accelerated growth and a
sustainable future for our patients, our people, and
our shareholders.
2022 was characterized by major transformation
and change but our purpose remains unchanged:
through life-
transforming patient outcomes
changing science and innovation for more years of
life and quality of life.
By year-end, we implemented a therapeutic area
focused R&D model in immunology and oncology,
and we added new drug modalities to include CAR-
T cell therapy and biological capabilities. We aim to rebuild our portfolio with
transformational medicines, by accelerated innovation and shorter drug development
timelines.
1
Dr. Paul Stoffels
Through the acquisitions of CellPoint and AboundBio, we gained access to a
breakthrough, point-of-care CAR-T manufacturing platform, a clinical-stage CAR-T
oncology pipeline and research capabilities for novel, differentiated CAR-T constructs,
that together have the potential to deliver life-saving medicines to more patients, faster
and more efficiently. Through the two acquisitions, we also onboarded an excellent team
of cell therapy scientists and oncology experts.
We brought forward our CD19 CAR-T candidates manufactured at point-of-care in two
Phase 1/2 studies in patients with relapsed/refractory non-Hodgkin lymphoma and
chronic lymphocytic leukemia. We reported encouraging initial safety and efficacy Phase
1/2 results for both CAR-T candidates, which we believe demonstrate that through the
decentralized delivery model, a 7-day vein-to-vein, leukapheresis to infusion time, is
feasible. In addition, using non-frozen cells with a short culture time seems to result in a
promising safety and efficacy profile of the CAR-T therapy.
Over the next years, we aim to further broaden our CAR-T oncology portfolio and bring
additional differentiated CAR-T candidates into the clinic and to market, while further
advancing the ongoing Phase 1/2 studies in hemato-oncology, for which Phase 1 topline
results are expected around mid-2023.
1
Throughout this report, ‘Dr. Paul Stoffels’ should be read as ‘Dr. Paul Stoffels, acting via Stoffels IMC BV’
4
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
In addition, we remain fully committed to immunology, an area where there is still
significant unmet patient need and for which we have built deep scientific know-how
and expertise since our founding. With our programs targeting multiple modes-of-action
and drug modalities, we have a differentiated portfolio of preclinical to commercial
assets.
We are very proud that our first marketed medicine, Jyseleca®, an orally administered
JAK1 preferential inhibitor, continued to deliver solid in-market performance with a
growing European base and €87.6 million in net sales for the year 2022, reaching 18,000
patients with rheumatoid arthritis and ulcerative colitis across Europe.
Although the topline results from the Phase 3 DIVERSITY trial of filgotinib in Crohn’s
disease were not supportive to submit a Marketing Authorization Application in Europe
as the induction cohorts did not meet the co-primary endpoints, we were encouraged by
the confirmed safety profile and the efficacy results observed in the maintenance study
and will thoroughly review the full data to further help our understanding of this disease
and to support future research efforts.
We plan to further invest in our Jyseleca® franchise and later this year, we aim to start a
Phase 3 study in axial spondyloarthritis, a type of arthritis that typically begins between
the age of 20 and 40, and that causes pain and swelling in the spine and the joints that
connect the bottom of the spine to the pelvis.
Over the past year, we also made progress with GLPG3667, our selective TYK2 kinase
inhibitor, and we aim to start a Phase 2 study in dermatomyositis in the first half of 2023
and in systemic lupus erythematosus in the second half of 2023.
Finally, to accelerate time-to-patients, we have expanded our drug modality capabilities
in immunology, and recently announced that we aim to start clinical development with
a CD19 CAR-T candidate in refractory systemic lupus erythematosus in 2023.
2022 was characterized by major transformation and
change but our purpose remains unchanged:
through life-
transforming patient
changing science and innovation for more years of
life and quality of life.
outcomes
Beyond our renewed portfolio focus, our strategic transformation also includes
formalizing our Environmental, Social and Governance (ESG) ambitions. Over the course
of 2022, we completed a new materiality analysis, which allows us to further focus our
Sustainability ambitions in those areas that we believe are most material and where we
can make the greatest impact.
5
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
With the new strategic direction, a new Executive Committee composition was
implemented with the retirement of Dr. Walid Abi-Saab and André Hoekema, and the
appointments of Valeria Cnossen, General Counsel, also responsible for Compliance &
Ethics, the Corporate Secretary Office and Intellectual Property, and Annelies Missotten,
Chief Human Resources Officer. In addition, our Board of Directors approved an updated
Corporate Governance Charter, which refers, amongst other updates,
to the
establishment of the Management Committee supporting the Executive Committee. As
a result, our senior leadership team has been further strengthened with key hires and
in Research, Development, Business Development and
internal promotions
Commercial. We continue to endeavor to attract experienced top talent across the
organization to execute on our strategy and accelerate innovation and time-to-patients
in our strategic focus areas of immunology and oncology.
During 2022, we focused on optimizing our organizational set-up and cost base.
Financially, we ended 2022 with a strong balance sheet of €4.1 billion in cash and current
financial investments, which provides us with the necessary means to look for additional
innovation to accelerate our R&D portfolio while progressing our internal
external
programs. We are confident that with our renewed focus to bring transformational
medicines to more patients, faster, we are well-positioned to deliver significant long-
term value for our shareholders.
Taking Galapagos on course for the future and embracing a new strategic direction was
challenging and hard work for all the teams. I would like to thank all our employees
for their commitment during the past year and for their relentless efforts to pioneer
for patients. I want to sincerely thank our shareholders for their trust and continued
commitment to stay with us on our journey.
We look forward with great optimism to a sustainable future as we continue to innovate
for patients to give them what matters the most: more time with family and friends. More
joy. Longer, healthier, better-quality lives.
Respectfully,
Dr. Paul Stoffels1
CEO and Chairman of the Board of Directors
1
Throughout this report, ‘Dr. Paul Stoffels’ should be read as ‘Dr. Paul Stoffels, acting via Stoffels IMC BV’
6
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Our Company
Our Journey
1999
Founded with
headquarters in Belgium
and operations in
the Netherlands
2020
First medicine
approved in
Europe and Japan for
rheumatoid arthritis
Own commercial
organization established
in Europe
2019
Transformative
deal with Gilead
2021
First medicine
approved in Europe
for ulcerative colitis
Marketing
Authorization
Holder in
27 European
countries
2005
IPO on Euronext
2006
Expansion into
France
2015
IPO on NASDAQ
Initial
partnership
with Gilead
for filgotinib
2022
First medicine
approved in
Great Britain
and Japan
for ulcerative
colitis
Acquisitions of
CellPoint (NL) and
AboundBio (USA) to
expand into
oncology, CAR-T and
biologicals
|
| 3
Our Vision
Galapagos' vision is to transform patient outcomes through life-changing
science and innovation for more years of life and quality of life.
Our Mission
We accelerate transformational innovation through the relentless pursuit of
groundbreaking science, our entrepreneurial spirit and a collaborative
mindset.
7
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Our Strategy
We are a fully integrated biotechnology company united around a single purpose: to
transform patient outcomes worldwide through the relentless pursuit of life changing
science and innovation for more years of life and quality of life.
More than two decades ago, Galapagos was founded to discover new medicines with
novel modes of action. Since then, we identified numerous novel targets, generated an
R&D pipeline across multiple indications, entered into a significant strategic partnership
with Gilead, and successfully brought to market a medicine in two indications. We have
built a solid foundation based on strong financials, deep scientific and therapeutic
expertise in key areas, and a significant commercial footprint.
In 2022, we unveiled a new strategy to accelerate growth and value creation by reshaping
the way we innovate and operate. This strategy provides a clear path forward based on
three key pillars:
1. We shift from novel target-based discovery to patient-focused medical need
research and development with a focus on our key therapeutic areas of immunology
and oncology;
2. We build on our current capabilities and de-risk R&D through multiple drug
modalities, including CAR-T, small molecules and biologicals, and by focusing on
best-in-disease validated targets in our strategic therapeutic areas with shorter time-
to-patient potential;
3. We increase our business development efforts to complement our internal pipeline
and continue to work with our collaboration partner Gilead to bring more medicines
to patients worldwide.
Our differentiation is our entrepreneurship and integrated approach – patient-focused,
risk managed, collaborative and driven by medical need – combined with the scale
of our resources and our deep scientific expertise in key therapeutic areas. Together,
these enable us to significantly reduce time-to-results and accelerate delivery of
transformational innovations and medicines to patients.
8
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Key achievements in 2022
Corporate and Operational Performance
Jyseleca® commercial & regulatory progress
Adoption across Europe with reimbursement for reumathoid arthritis (RA) in 15
countries and for ulcerative colitis (UC) in 11
Sobi, our distribution and commercialization partner in Eastern and Central Europe,
Portugal, Greece, and the Baltic countries, launched Jyseleca® in RA in the Czech
Republic and Portugal, resulting in €2.0 million milestone payments to Galapagos
The Medicines and Healthcare products Regulatory Agency (MHRA) in Great Britain
and the Ministry of Health, Labour and Welfare (MHLW) in Japan approved filgotinib
200mg for the treatment of moderate to severe UC
The European Medicines Agency’s (EMA) scientific committee, CHMP, adopted the
recommendation of the PRAC to add measures to minimize risks of serious side
effects with JAK inhibitors used for chronic inflammatory disorders
Positive opinion issued by the CHMP for Jyseleca®‘s European label update based on
testicular function safety data from MANTA/RAy semen parameter studies
Portfolio update
Initiated preparations to start a Phase 2 program with TYK2 inhibitor GLPG3667 in
dermatomyositis (DM) and systemic lupus erythematosus (SLE)
Discontinued our activities in fibrosis and kidney disease as a result of the new
strategic therapy area focus
Halted development of SIK3 inhibitor GLPG4399; medicinal chemistry activities to
identify SIK inhibitors with improved pharmacology continues
Reported initial encouraging safety and efficacy data at ASH2 2022 from the ongoing
ATALANTA-1 Phase 1/2 study in relapsed/refractory non-Hodgkin lymphoma (rrNHL)
with CD19 CAR-T candidate, GLPG5101, manufactured at point-of-care
Corporate update
Appointed Dr. Paul Stoffels as Chief Executive Officer, succeeding Onno van de Stolpe,
as of 1 April 2022. Following approval by Galapagos’ shareholders on 26 April 2022,
adopted a one-tier governance model. Subsequently, the (new) Board of Directors
appointed Dr. Paul Stoffels as Chairman of the Board of Directors
Implemented new strategic direction to accelerate innovation and time-to-patients,
focusing on key therapeutic areas of immunology and oncology, diversifying beyond
small molecules to include CAR-T and biologicals, and set up a fit-for-purpose R&D
organization
2
Annual Society of Hematology
9
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Entered into the field of oncology through the combined acquisitions of CellPoint
B.V. (CellPoint) and AboundBio, Inc. (AboundBio), in all-cash transactions against
payment of an upfront amount of €125 million for CellPoint, with an additional
€100 million to be paid upon achievement of certain milestones, and against
payment of an amount of $14 million for AboundBio
Received various transparency notifications from EcoR1 Capital LLC and FMR LLC,
indicating that their shareholdings in Galapagos changed, crossing the 5% threshold,
to 5.2% and 5.9%, respectively, of the current outstanding Galapagos shares
Raised €6.7 million through the exercise of subscription rights
Announced changes to the Executive Committee: Dr. Walid Abi-Saab (Chief Medical
Officer) and Dr. André Hoekema (Chief Business Officer) retired from the company,
and Valeria Cnossen (General Counsel) and Annelies Missotten (Chief Human
Resources Officer) appointed as new members of the Executive Committee as of 1
January 2023. We anticipate announcing a Head of R&D and Executive Committee
member in the first half of 2023. Until such appointment, Dr. Paul Stoffels will act as
Head of R&D ad interim
Post-period events
The European Commission approved the recommendation of the PRAC to add
measures to minimize risks of serious side effects with all JAK inhibitors used for
chronic inflammatory disorders
Obtained reimbursement for Jyseleca® in UC in Italy and Denmark
Completed MANGROVE Phase 2 study with GLPG2737 in polycystic kidney disease
and decided not to-out-license the program due to lack of effect of GLPG2737 on
kidney volume and renal progression compared to placebo. The open-label
extension study was subsequently stopped
Data from SELECTION long-term extension (LTE) study of filgotinib in patients with
UC presented at annual ECCO congress showed that filgotinib 200mg maintained
a consistent safety profile observed in previous SELECTION studies. In addition,
symptomatic remission rates and health-related quality of life (HRQoL) improved in
patients with moderate to severe active UC who received filgotinib 200mg for nearly
four years
Poster presentation at annual EBMT-EHA congress demonstrating initial encouraging
safety and efficacy results from ongoing EUPLAGIA-1 Phase 1/2 study with a fresh
point-of-care manufactured CD19 CAR-T candidate, GLPG5201,
in patients with
relapsed/refractory chronic lymphocytic leukemia (rrCLL) and small lymphocytic
lymphoma (rrSLL), with or without Richter’s transformation (RT). All 7 out of 7 eligible
rrCLL patients, including 4 patients with RT, responded to treatment (Objective
Response Rate of 100%), and GLPG5201 showed an acceptable safety profile with
no cytokine release syndrome (CRS) higher than grade 2, or immune effector cell-
associated neurotoxicity syndrome (ICAN) observed
10
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Announced topline results from the DIVERSITY study, a combined induction and
maintenance Phase 3 study of filgotinib in Crohn’s disease. While the co-primary
endpoints for filgotinib 200mg in the maintenance part of the study were met and the
observed safety profile is consistent with its known safety profile, the two induction
cohorts missed the co-primary endpoints of clinical remission and endoscopic
response at Week 10. Galapagos decided not to submit a Marketing Authorization
Application in Europe based on these topline data
Financial performance
Consolidated Key Figures
(thousands of €, if not stated otherwise)
Year ended
31 December 2022
Year ended
31 December 2021
Year ended
31 December 2020
Income statement
Product net sales
Collaboration revenues
Total net revenues
Cost of sales
R&D expenditure
G&A expenses
Other operating income
Operating loss
Net financial results
Taxes
87,599
417,681
505,280
(12,079)
(515,083)
(292,486)
46,848
14,753
470,093
484,846
(1,629)
(491,707)
(210,855)
53,749
(267,520)
(165,596)
52,373
(2,844)
42,598
(2,423)
2
478,051
478,053
-
(523,667)
(185,225)
52,207
(178,632)
(131,143)
(1,226)
Net loss from continuing operations
(217,991)
(125,422)
(311,001)
Net profit from discontinued operations, net of tax
-
22,191
5,565
Net loss
(217,991)
(103,231)
(305,436)
Balance sheet
Cash and cash equivalents
Current financial investments
R&D incentives receivables
Assets
Shareholders’ equity
Deferred income
Other liabilities
508,117
3,585,945
146,067
4,734,351
2,526,026
1,989,230
219,094
2,233,368
2,469,809
144,013
5,193,160
2,643,362
2,364,701
185,097
2,135,187
3,026,278
135,728
5,717,731
2,670,355
2,809,133
238,242
11
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Year ended
31 December 2022
Year ended
31 December 2021
Year ended
31 December 2020
(thousands of €, if not stated otherwise)
Cash flow
Operational cash burn
Cash flow used in operating activities
Cash flow generated from/used in (-) investing activities
(1,245,514)
Cash flow generated from/used in (-) financing activities
(1,487)
Increase/decrease (-) in cash and cash equivalents
(1,747,545)
(513,774)
(500,544)
(564,840)
(503,827)
541,238
(3,876)
33,535
(517,404)
(427,336)
757,288
22,040
351,994
Effect of currency exchange rate fluctuation on cash and
cash equivalents
Cash and cash equivalents on 31 December
22,293
508,117
56,763
(70,539)
2,233,368
2,143,071
Cash and cash equivalents from continuing operations
508,117
2,233,368
2,135,187
Cash and cash equivalents classified as assets held for
sale
-
-
7,884
Current financial investments on 31 December
3,585,945
2,469,809
3,026,278
Total current financial investments and cash and cash
equivalents on 31 December
4,094,062
4,703,177
5,169,349
Financial ratios
Number of shares issued on 31 December
65,835,511
65,552,721
65,411,767
Basic and diluted loss per share (in €)
Share price on 31 December (in €)
Total group employees on 31 December (number)(*)
(3.32)
41.35
1,338
(1.58)
49.22
1,309
(4.69)
80.48
1,489
(*) The number of employees on 31 December 2020 included 185 employees of Fidelta, which has been sold to Selvita on 4 January 2021.
Our net revenues in 2022 amounted to €505.3 million, compared to €484.8 million in 2021.
We reported product net sales of Jyseleca® in Europe in 2022 amounting to €87.6 million,
compared to €14.8 million last year.
Cost of sales related to Jyseleca® net sales in 2022 amounted to €12.1 million, compared
to €1.6 million in 2021.
Collaboration revenues amounted to €417.7 million in 2022, compared to €470.1 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 €174.4 million in
2022 (compared to €235.7 million in 2021). This decrease was due to a lower increase in
the percentage of completion, slightly offset by higher revenue recognition of milestone
payments, strongly influenced by the milestone achieved in 2022 related to the
regulatory approval in Japan for UC.
12
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
The revenue recognition related to the exclusive access rights granted to Gilead for our
drug discovery platform amounted to €230.4 million in 2022 (compared to €230.6 million
in 2021). We also recognized royalty income from Gilead for Jyseleca® for €10.7 million
in 2022 (compared to €3.8 million in 2021). Additionally, we recorded in 2022 milestone
payments of €2.0 million triggered by the initial sales of Jyseleca® in the Czech Republic
and Portugal by our distribution and commercialization partner Sobi.
Our deferred income balance at 31 December 2022 includes €1.5 billion allocated to our
drug discovery platform that is recognized linearly over the remaining period of our
10-year collaboration, and €0.5 billion allocated to the development of filgotinib which
is recognized over time until the end of filgotinib’s development period.
Our R&D expenditure in 2022 amounted to €515.1 million, compared to €491.7 million in
2021. Depreciation and impairment costs in 2022 amounted to €54.5 million (compared to
€17.5 million in 2021). This increase was primarily due to an impairment of €26.7 million of
previously capitalized upfront fees related to our collaboration with Molecure on the dual
chitinase inhibitor OATD-01 (GLPG4716) and impairments of intangible assets related to other
discontinued projects recorded in 2022. Personnel costs increased from €165.2 million in
2021 to €190.1 million in 2022 related to increases in restructuring costs and accelerated non-
cash cost recognition for subscription right plans related to good leavers. This was partly
offset by a decrease in subcontracting costs from €251.1 million in 2021 to €214.9 million in
2022 following the evolution of our programs.
Our S&M and G&A expenses amounted to €292.5 million in 2022, compared to
€210.9 million in 2021. This increase was primarily due to the termination of our 50/
50 filgotinib co-commercialization cost sharing agreement with Gilead for filgotinib in
2022 which explains €59.7 million of the variance. The cost increase was also explained
by an increase in personnel costs of €26.6 million in 2022 compared to 2021, which are
related to an increase in our commercial work force driven by the commercial launch of
filgotinib in Europe, accelerated non-cash cost recognition for subscription right plans
related to good leavers and restructuring costs.
Other operating income (€46.8 million in 2022 compared to €53.7 million in 2021)
decreased, mainly driven by lower grant and R&D incentives income.
We reported an operating loss amounting to €267.5 million in 2022, compared to an
operating loss of €165.6 million in 2021.
Net financial income in 2022 amounted to €52.4 million, compared to net financial income of
€42.6 million in 2021. Net financial income in 2022 was primarily attributable to €41.3 million
of unrealized currency exchange gains on our cash and cash equivalents and current financial
investments at amortized cost in U.S. dollars, and to €6.9 million of positive changes in the (fair)
value of our current financial investments. The other financial expenses also had the effect of
discounting our non-current deferred income of €7.7 million. Net interest income amounted to
€11.1 million in 2022 as compared to €8.8 million of net interest expense in 2021.
We reported a group net loss in 2022 of €218.0 million, compared to a group net loss of
€103.2 million in 2021.
13
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Cash, cash equivalents and current financial investments
Current financial investments and cash and cash equivalents totaled €4,094.1 million on
31 December 2022 as compared to €4,703.2 million on 31 December 2021.
Total net decrease in cash and cash equivalents and current financial investments
amounted to €609.1 million in 2022, compared to a net decrease of €466.1 million in
2021. This net decrease was composed of (i) €513.8 million of operational cash burn, (ii)
€153.4 million cash out from the acquisitions of CellPoint and AboundBio, net of cash
acquired, offset by (iii) €6.9 million positive changes in (fair) value of current financial
investments and €44.5 million of mainly positive exchange rate differences, and (iv)
€6.7 million of cash proceeds from capital and share premium increase from exercise of
subscription rights in 2022.
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 decrease or increase in our cash and cash equivalents
(excluding the effect of exchange rate differences on cash and cash equivalents), minus:
1.
2.
3.
the net proceeds, if any, from share capital and share premium increases included
in the net cash flow generated from/used in (–) financing activities
the net proceeds or cash used, if any, in acquisitions or disposals of businesses; the
movement in restricted cash and movement in current financial investments, if any,
the loans and advances given to third parties, if any, included in the net cash flow
generated from/used in (–) investing activities
the cash used for other liabilities related to the acquisition of businesses, if any,
included in the net cash flow generated from/used in (–) operating activities.
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, to the closest
IFRS measures, for each of the periods indicated:
(thousands of €)
2022
2021
Increase/decrease (-) in cash and cash equivalents
(excluding effect of exchange differences)
Less:
Net proceeds from capital and share premium increases
Net purchase/sale (-) of current financial investments
Cash out from acquisition of subsidiaries, net of cash acquired
Cash advances and loans to third parties
Cash used for other liabilities related to the acquisition of subsidiaries
(1,747,545)
33,535
(6,695)
(3,314)
1,087,032
(566,365)
115,270
10,000
28,164
-
-
-
Cash in from disposals of subsidiaries, net of cash disposed of
-
(28,696)
Total operational cash burn
(513,774)
(564,840)
14
Galapagos NV Annual Report 2022
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 2022
80
60
40
20
0
01.01.2022
01.04.2022
01.07.2022
01.10.2022
31.12.2022
GLPG.AM (in EUR)
GLPG.US (in USD)
In 2022, the average daily trading volume on Euronext was 247,661 shares and
€12.7 million turnover. The daily trading volume on Nasdaq in 2022 was 259,904
American Depository Shares (ADSs) and $14.5 million turnover.
15
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Galapagos vs Next Biotech Index in 2022
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
01.01.2022
01.04.2022
01.07.2022
01.10.2022
31.12.2022
GLPG (Euronext)
Next Biotech Index
Galapagos vs Nasdaq Biotechnology Index in 2022
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
01.01.2022
01.04.2022
01.07.2022
01.10.2022
31.12.2022
GLPG (Nasdaq)
Nasdaq Biotechnology Index
Investor relations activities
16 analysts cover the Galapagos stock.
Our IR team participated in 20 investor conferences in 2022 in Europe and the U.S..
Several broker-organized and self-organized roadshows and (virtual) meetings were held
throughout the U.S. and Europe, during which we held approximately 600 investor
meetings.
16
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
We organized webcasts to present our 2021 Full Year, and our 2022 Q1, Half Year, and Q3
results.
The main topics of discussion with investors in 2022 included management changes,
including the appointment of our new CEO, the strategic review, including refocusing
of our pipeline and rightsizing of our operations, cash burn and capital allocation, the
acquisitions of AboundBio and CellPoint, our BD plans, the collaboration with partner
Gilead, commercial sales of Jyseleca® (filgotinib) in RA and first launch metrics for the
treatment of UC in Europe, the clinical development plans with our selective TYK2
inhibitor, GLPG3667 in DM and SLE, and the initial results with GLPG5101 in rrNHL
presented at ASH.
Our major shareholders at 31 December 2022 are provided in the chart below:
Potential external impacts
COVID-19
Whilst the beginning of 2022 was globally marked by steeply increasing infection rates
mainly due to the spread of the highly infectious Omicron-variant, the situation
improved significantly as of the second quarter and the strict measures taken by local
governments to help prevent the spread of the COVID-19 virus and protect the physical
and mental health of our staff could gradually be loosened. We nevertheless continue to
monitor COVID-19 infection rates at global and local levels, and have systems in place
to react quicky where needed to guarantee business continuity. We report the following
impacts:
17
Galapagos NV Annual Report 2022
25.38%Gilead56.45%Other shareholders7.04%Van Herk Investments5.18%EcoR1 Capital5.90%FMR LLC0.05%Insiders THE GALAPAGOS GROUP
Staff
At Galapagos, we maintained the measures put in place by local governments to
help prevent the spread of the COVID-19 virus and protect the physical and mental
health of our staff, albeit that these measures were gradually loosened during 2022.
The majority of our research staff continued to work from the office/labs. For
teleworkable functions we continued the implementation of our hybrid working
model launched in 2021, in locations where the ongoing COVID-19 situation and
corresponding local governmental measures permitted us to do so. For those
employees coming to the office, we maintained stringent cleaning and sanitation
protocols. We further kept our global and site-specific business continuity plans up-
to-date and continued to take appropriate recommended precautions.
Development portfolio
We have a business continuity plan for our clinical development programs. We
closely monitor each program in the context of the current global and local situation
of the COVID-19 pandemic and the associated specific regulatory,
institutional,
government guidance and policies related to COVID-19. Within the boundaries of
these guidelines and policies, and in consultation with our contract research
organizations (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 its effect on
the study where necessary and to facilitate the interpretation and reporting of results.
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
impact on the relative
competitiveness of our commercial operations due to travel restrictions, nor have
the effects of COVID-19 impacted our ability to engage in market access discussions.
Nevertheless, healthcare systems are under pressure across Europe, increasing the
volatility in reimbursement procedures and cost containment measures, and
potentially reducing the number of new therapy options initiated by healthcare
providers.
launch. Thus far we note no material
18
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Conflict in Ukraine
We currently have no clinical studies that are enrolling patients in Ukraine and
Russia. If our CROs experience significant or extended 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 pivotal studies such as DIVERSITY has
remained 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 CROs’ and our 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. This 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 conflict and the associated
specific regulatory, institutional, and government guidance and policies.
Going concern statement
To date, we have incurred significant operating losses, which are reflected in the
consolidated balance sheet showing €496.7 million accumulated losses as at
31 December 2022. We realized a consolidated net loss of €218.0 million for the year
ended 31 December 2022. Our existing current financial investments and cash and cash
equivalents of €4,094.1 million at 31 December 2022 will enable us to fund our operating
expenses and capital expenditure requirements at least for the next 12 months. The
Board of Directors 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 Board of Directors 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 Board of Directors 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.
19
Galapagos NV Annual Report 2022
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
Executive Committee has set up internal risk management and control systems within
Galapagos. The Board of Directors 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
20
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
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 management, see note 34
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 2022 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.
21
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
Disclaimer and other information
This report contains the information required under Belgian law.
Galapagos NV is a limited liability company organized under the laws of Belgium, with its
registered office at Generaal De Wittelaan L11 A3, 2800 Mechelen, Belgium and registered
with the Crossroads Enterprise Database (RPR Antwerp – division Mechelen) under
number 0466.460.429. 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 English. Galapagos will use reasonable efforts to
ensure the translation and conformity between the Dutch and English versions. In case
of inconsistency between the Dutch and English versions, the Dutch version shall prevail.
This document is the PDF version of the report, and is a free translation (for information
purposes only) of the official Dutch language version in the European single electronic
format (ESEF) of the Annual Report 2022. 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 this PDF version.
This report, as well as the statutory financial statements of Galapagos NV, are 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, as well as the statutory financial statements of Galapagos
NV, are available on our website (www.glpg.com).
We will use our 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.
22
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
With the exception of filgotinib’s approval as Jyseleca® for the treatment of moderate
to severe rheumatoid arthritis and ulcerative colitis by the European Commission, Great
Britain’s Medicines and Healthcare products Regulatory Agency, and the Japanese
Ministry of Health, Labour and Welfare, 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. These statements are often, but are not always, made through the use
of words or phrases such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “seek,”
“upcoming,” “future,” “estimate,” “may,” “will,” “could,” “would,” “potential,” “forward,”
“goal,” “next,” “continue,” “should,” “encouraging,” “aim,” “progress,” “remain,” “explore,”
“initial,” “promising,” “deliver,” “target,” “further,” as well as any similar expressions.
Forward-looking statements contained in this report include, but are not limited to,
statements made in the sections captioned “Letter from our CEO and Chairman”,
“Corporate and Operational Performance”, and “Portfolio” of this report, the guidance
from management regarding our financial results and expected operational use of cash
and estimated peak sales for Jyseleca® during the financial year 2023, statements
regarding our strategic and capital allocation priorities, statements regarding the
acquisitions of CellPoint and AboundBio, including statements regarding anticipated
benefits of the acquisitions and the integration of CellPoint and AboundBio into our
portfolio and strategic plans, statements regarding our regulatory outlook, statements
regarding preliminary, interim and topline data from the ATALANTA-1, EUPLAGIA-1,
MANGROVE, FILOSOPHY, CALOSOMA, SEA TURTLE, GALARISSO, and LADYBUG-studies
and any other data or analyses related to CD19 CAR-T, and our plans and strategy with
respect to such studies, statements regarding the timing and likelihood of business
development projects and external innovation, statements regarding the amount and
timing of potential future milestones, opt-in, royalty or other payments, statements
regarding our R&D-plans, strategy, and outlook, including progress on our immunology
or oncology-portfolio, our CAR-T-portfolio, or our SIKi-portfolio, and any potential
changes in such strategy, statements regarding our pipeline and complementary
technology platforms faciliting future growth, statements regarding our strategic re-
evaluation, including our ambition by 2028, statements regarding our commercialization
efforts for filgotinib, our product candidates, and any of our future approved products,
statements regarding our expectations on commercial sales of filgotinib and any of our
product candidates (if approved), statements regarding our collaboration with Lonza,
statements regarding the global R&D-collaboration with Gilead, and the amendment
of our arrangement with Gilead for commercialization and development of filgotinib,
statements regarding the expected timing, design and readouts of ongoing and planned
preclinical studies and clinical trials, including, but not limited to, with (i) filgotinib in RA,
UC and AxSpA, (ii) with GLPG3667 in SLE and DM, (iii) compounds from our SIKi-portfolio,
(iv) GLPG2737 in ADPKD, (v) GLPG5101 in rrNHL and rSLE, (vi) GLPG5201 in rrCLL and
rrSLL, (vii) GLPG5301 in rrMM, and (viii) with the next-generation CAR-Ts and bispecific
23
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
antibodies, including recruitment for trials and topline results for trials and studies in
our portolio, statements related to the EMA’s 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 No 726/2004, and regarding
the related CHMP opinion and the related EC's decision, statements about the European
label update based on testicular function safety data from the MANTA/MANTA RAy-
studies and regarding the related CHMP opinion, statements relating to interactions
with regulatory authorities, statements relating to the timing or likelihood of additional
regulatory authorities’ approval of marketing authorization for filgotinib for RA, UC or
other indications, such additional regulatory authorities requiring additional studies,
and the timing or likelihood of pricing and reimbursement interactions for filgotinib,
statements relating to the development of our commercial organization, commercial
sales, and rollout of our products or product candidates (if approved), statements related
to the expected reimbursement for Jyseleca®, statements regarding the preparations
for the Phase 2 programs with our TYK2 inhibitor product candidate, GLPG3667, and
the timing for the start of a study in SLE, statements regarding the timing of clinical
development with our CD19 CAR-T candidate, GLPG5101, in rSLE, statements regarding
the progress of patient recruitment efforts in the European sites of the Phase 1/2
ATALANTA-1-study with our CD19 CAR-T candidate, GLPG5101, in rrNHL, as well as in
the EUPLAGIA-1-study with our CD19 CAR-T candidate, GLPG5201, in rrCLL/SLL, and
the timing for topline results from such studies, statements regarding the timing for
expansion of, and patient enrolment in, the CAR-T-portfolio with a BCMA CAR-T product
candidate, GLPG5301, in rrMM, statements regarding our "Forward, Sustainably" strategy
and the related materiality assessment, statements regarding the changes in our
leadership and expected resulting benefits, and statements regarding our strategy,
portfolio goals, business plans, and sustainability plans. We caution the reader that
forward-looking statements are based on our management’s current expectations and
beliefs and are not guarantees of any future performance. Forward-looking statements
may involve known and unknown risks, uncertainties and other factors which might
cause our actual results, financial condition and liquidity, performance or achievements,
or 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
statements. Such risks include, but are not limited to, the risk that our beliefs, guidance,
and expectations regarding our 2023 revenues, cash burn, operation expenses, or other
financial may be incorrect (including because one or more of our assumptions
underlying our revenue or expense expectations may not be realized), the risk that
ongoing and future clinical trials may not be completed in the currently envisaged
timelines or at all, the inherent risks and uncertainties associated with competitive
developments, clinical trials, recruitment of patients, product development activities,
and regulatory approval requirements (including, but not limited to, the risk that data
from our ongoing and planned clinical research programs in RA, UC, AxSpA, SLE, DM,
ADPKD, rSLE, NHL, CLL, rrMM, or any other indications or diseases, may not support
registration or further development of our product candidates due to safety, or efficacy
concerns, or any other reasons), risks related to the acquisitions of CellPoint and
AboundBio, including the risk that we may not achieve the anticipated benefits of the
acquisitions of CellPoint and AboundBio, the inherent risks and uncertainties associated
with target discovery and validation, and drug discovery and development activities,
the risk that the preliminary and topline data from the ATALANTA-1, EUPLAGIA-1,
24
Galapagos NV Annual Report 2022
THE GALAPAGOS GROUP
MANGROVE, FILOSOPHY, CALOSOMA, SEA TURTLE, GALARISSO, and LADYBUG-studies
may not be reflective of the final data, risks related to our reliance on collaborations with
third parties (including, but not limited to, Gilead and Lonza), the risk that the transition
of the European commercialization responsibility of filgotinib from Gilead to us, will
not have the currently expected results for our business and results of operations, the
risk that estimates regarding our filgotinib development program and the commercial
potential of our product candidates and our expectations regarding the costs and
revenues associated with the transfer of European commercialization rights to filgotinib
may be incorrect, the risk that we will not be able to continue to execute on our currently
contemplated business plan and/or will revise our business plan, including the risk
that our plans with respect to CAR-T may not be achieved on the currently anticipated
timeline or at all, the risk that our projections and expectations regarding the
commercial potential of our product candidates or expectations regarding the revenues
and costs associated with the commercialization rights may be inaccurate, the risks
related to our strategic transformation exercise, including the risk that we may not
achieve the anticipated benefits of such exercise on the currently envisaged timeline or
at all, the risk that we will be unable to successfully achieve the anticipated benefits
from our leadership transition, the risk that we will encounter challenges retaining or
attracting talent, the risks related to disruption in our operations, supply chain, or
ongoing studies due to the conflict between Russia and Ukraine, the risks related to
continued regulatory review of filgotinib following approval by relevant regulatory
authorities, including by the EC and EMA, and the EMA’s safety review of JAK inhibitors
used to treat certain inflammatory disorders, the risk that the EMA and/or other
regulatory authorities determine that additional post-approval trials of filgotinib or any
other product candidate that are approved in the future would be required, the risk that
the EMA and/or other regulatory authorities may require that the market authorization
for filgotinib in the EU be amended, the risk that the EMA and/or other regulatory
authorities may impose JAK class-based warnings, the risk that the EMA’s and/or other
regulatory authorities' safety review may negatively impact acceptance of filgotinib by
patients, the medical community, or healthcare payors, and the risks and uncertainties
related 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 filings and reports with the SEC,
including in our most recent annual report on Form 20‐F filed with the SEC, and our
subsequent filings and reports filed with the SEC. We also refer to the “Risk Factors”
section of this report. Given these risks and uncertainties, the reader is advised not to
place any undue reliance on any such forward-looking statements. In addition, even
if our results, performance, financial condition and liquidity, or the industry in which
we operate, are consistent with such forward-looking statements, they may not be
predictive of results, performance or achievements in future periods. These forward-
looking statements speak only as of the date of publication of this report. We expressly
disclaim any obligation to update any such statements in this report to reflect any
change in our expectations with regard thereto, or any change in events, conditions or
circumstances on which any such statements is based, or that may affect the likelihood
that actual results will differ from those set forth in any such statements, unless
specifically required by law or regulation.
25
Galapagos NV Annual Report 2022
Portfolio
Our programs in immunology
and oncology
Outlook for 2023
Forward with Purpose
PORTFOLIO
Portfolio and outlook 2023
Portfolio
The following chart provides an overview of our lead product and product candidates
currently in development as of the date of the publication of this report.
Program
Class
Phase 1
Phase 2
Phase 3
Approved
Y
G
O
L
O
C
N
O
Y
G
O
L
O
N
U
M
M
I
5101
5201
5301
Program
filgotinib
3667
CD19 CAR-T
CD19 CAR-T
BCMA CAR-T
Next-gen CAR-T
Class
JAK1
TYK2
SIKi
5101
CD19 CAR-T
SLE
NHL
CLL
MM
Phase 1
Phase 2
Phase 3
Approved
AxSpA
RA & UC
SLE
DM
Note: filgotinib is approved for RA and UC in Europe and Japan.
AxSpA, axial spondyloarthritis; RA, rheumatoid arthritis; UC, ulcerative colitis; rSLE, refractory systemic lupus
erythematosus; DM, dermatomyositis; NHL, non-Hodgkin lymphoma; CLL, chronic lymphocytic leukemia; MM,
multiple myeloma
27
Galapagos NV Annual Report 2022
PORTFOLIO
Outlook 2023
Topline results
Filgotinib:
FILOSOPHY
Phase 4 in RA
GLPG5101:
CD19 CAR-T
Phase 1 part of
Phase 1/2 in NHL
GLPG5201:
CD19 CAR-T
Phase 1 part of
Phase 1/2 in CLL
Regulatory progress
Trial initations
CD19 CAR-T IND
submission in
the US
Filgotinib:
Phase 3 in AxSpA
CD19 CAR-T
Phase 2 in rSLE
GLPG5101/
GLPG5201:
CD19 CAR-T NHL/CLL
expansion cohorts
GLPG5301:
BCMA CAR-T
Phase 1/2 in MM
GLPG3667:
TYK2i Phase 2 in
DM & SLE
28
Galapagos NV Annual Report 2022
PORTFOLIO
Immunology
Small Molecules pipeline
Jyseleca® franchise
Jyseleca® in rheumatoid arthritis (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 five major European markets (EU5)
is approximately €3.3 billion. Despite progress in the treatment of RA, there
remains a considerable unmet need as sustained remission remains rare.7
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.
To date there are 4 JAK inhibitors approved for the treatment of RA in the EU5, including
Jyseleca® (filgotinib) an orally administered preferential JAK1 inhibitor.
Below we present the RA market in the EU5.
7
Chen Y, et al. Clin Rheumatol. 2019 Mar;38(3):727-738. doi: 10.1007/s10067-018-4340-7. Epub 2018 Oct 19.
29
Galapagos NV Annual Report 2022
PORTFOLIO
JAKi RA market share
(total)
25%
25%
27%
23%
27%
26%
16%
15%
16%
18%
22%
21%
59%
59%
57%
58%
51%
53%
Q1'20 Q3'20
Q1'21 Q3'21 Q1'22 Q3'22
Anti TNF
JAKi
Other biologics
Source: Market research from Therapy Watch, Q3 2022 (6 month average)
Regulatory progress of Jyseleca® in RA
In 2020, Jyseleca® (filgotinib 200mg and 100mg) obtained regulatory approval in Europe,
Great-Britain, and Japan for the treatment of adult patients with moderate to severe
active RA.
and special warnings
The European Summary of Product Characteristics for filgotinib, which includes
contraindications
at
www.ema.europa.eu. The Great Britain Summary of Product Characteristics for
filgotinib can be found at www.medicines.org.uk/emc and the Northern Ireland
Summary
at
www.emcmedicines.com/en-GB/northernireland, respectively. The interview form
from the Japanese Ministry of Health, Labour and Welfare is available at
www.info.pmda.go.jp.
and precautions,
Characteristics
available
filgotinib
Product
found
can
for
be
of
is
Also in 2020, Gilead Sciences, Inc (Gilead) received a Complete Response Letter (CRL)
from the US Food and Drug Administration (FDA) for the New Drug Application (NDA) for
filgotinib. Consequently, Gilead decided not to advance with resubmission in the US for
approval of filgotinib as a treatment for RA in the U.S.
In 2022, the Pharmacovigilance Risk Assessment Committee (PRAC) of the European
Medicines Agency (EMA) concluded its Article 20 safety review of all JAK inhibitors
approved in the EU for the treatment of inflammatory diseases and recommended the
harmonization of all labels. PRAC concluded that JAK inhibitors should maintain their
indication for the treatment of patients with RA who have responded inadequately to
or who cannot tolerate disease modifying anti-rheumatic drugs (DMARDs) therapy, and
for patients with UC who have responded inadequately to or who cannot tolerate
conventional therapy or biologics. PRAC also recommended all JAK inhibitor product
labels be updated to include a precautionary approach for use of JAK inhibitors in
patients with identified risk factors only if no suitable treatment alternative is available
30
Galapagos NV Annual Report 2022
PORTFOLIO
(Section 4.4 of the product label – Warning and Precautions). On 11 November 2022,
the Committee for Medicinal Products for Human Use (CHMP), the scientific committee
of the EMA, adopted PRAC’s recommendation and on 10 March 2023, this decision was
approved by the European Commission.
Commercialization of Jyseleca® in RA
In 2021, we took full ownership of the manufacturing and commercialization of Jyseleca®
in Europe and became the Marketing Authorization Holder (MAH) in 27 countries in
Europe. Jyseleca® is now reimbursed in 15 countries for RA, including the major markets
Germany, France, Spain, Italy, and Great Britain.
In Central and Eastern Europe, Portugal, Greece and the Baltic countries, our partner
the distribution and
Swedish Orphan Biovitrum AB (Sobi)
commercialization of Jyseleca®. The graphic below represents the reimbursement
progress of Jyseleca® throughout Europe since its approval for RA in September 2020.
is responsible for
Jyseleca® reimbursement in RA in Europe
Reimbursed (15 countries)
In progress
Eastern and Central Europe, Portugal, Greece, Baltic countries partnered with Sobi
Under our amended collaboration agreement with Gilead, Gilead remains responsible
for the commercialization and distribution of Jyseleca® outside of Europe, including in
Japan where Jyseleca® is approved in RA and is co-marketed with Eisai.
See further details regarding the revised Gilead collaboration agreement for filgotinib in
our Notes to the consolidated financial statements.
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 programs.
31
Galapagos NV Annual Report 2022
PORTFOLIO
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, which enrolled subjects who completed either
the FINCH 1, FINCH 2, or FINCH 3 studies.
We and Gilead published integrated safety data from 7 RA studies in Annals of the
RheumaticDiseases(Winthrop etal.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 a similar incidence rate across
all dose groups. The data underscore the acceptable safety and tolerability profile of
filgotinib as monotherapy and in conjunction with MTX/csDMARDs8 in RA.
In preclinical animal toxicology studies, when administered at doses beyond its
approved dose in humans, filgotinib induced adverse effects on semen parameters.
Consequently, we and Gilead conducted dedicated male patient semen analysis studies
in UC and CD patients called MANTA, and RA, ankylosing spondylitis (AS), and psoriatic
arthritis (PsA) patients, called MANTA-RAy, concurrent to all Phase 3 programs.
In March 2021, we reported on the primary endpoint with the MANTA and MANTA-RAy
studies investigating the effect on semen parameters, which indicated 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. Subsequently, a Type II variation application was
submitted to the EMA in June 2022, supported by interim data on the primary, secondary
and exploratory endpoints at Week 13 and 26 for subjects who met a prespecified sperm
decrease at these timepoints (up to Week 52) from the MANTA and MANTA-RAy studies.
Following assessment of the interim data by the CHMP, it was concluded in the opinion
that the data did not reveal a difference between treatment groups in the proportion of
patients who had a 50% or more decrease from baseline in semen parameters at Week
13 (pooled primary endpoint: filgotinib 6.7%, placebo 8.3%) and at Week 26. Further,
CHMP concluded that the data did not show any relevant changes in sex hormone
levels or change from baseline in semen parameters across treatment groups. The CHMP
concluded that these clinical data were not suggestive of filgotinib-related effects on
testicular function. In October 2022, we received a positive CHMP opinion to update
the European label whereby the language in the section of the Special Warnings and
Precautions about the potential effect of filgotinib on sperm production and male
fertility was removed from the Summary of Product Characteristics (SmPC). In addition,
the MANTA/RAy studies were removed from the Risk Management Plan (RMP).
In 2022, we presented preliminary results from our first international, real-world arthritis
study, FILOSOPHY, FILgotinibObservational Study Of Patient Health-related outcomes,
at the American College of Rheumatology (ACR) Convergence 2022 meeting. The data
showed that filgotinib induced rapid relief in pain and fatigue as early as Week 1 as
well as improvements in disease activity9 at Month 1. These interim results were based
8
9
Conventional synthetic DMARDs
Galloway J, Bevers K, Vershueren P, et al. Presented at: ACR Convergence 2022; November 10-14, 2022; Philadelphia, Pennsylvania.
32
Galapagos NV Annual Report 2022
PORTFOLIO
on data from 200 real-world patients with moderate to severe active RA enrolled in
Germany, the United Kingdom, the Netherlands, Belgium and Italy.
Jyseleca® in ulcerative colitis (UC)
UC is an inflammatory bowel disease (IBD) 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 EU5.
Current treatment landscape in UC in Europe
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 UC for
some patients, 30% of patients do not respond to treatment,10 and 19% to 59% of initial
responders do not have a sustainable treatment response.11
Therefore, the medical need for improved treatment efficacy with additional treatment
options remains high.
The current market in Europe for UC is approximately €1.0 billion and is expected to grow
at a CAGR of 10% between 2020 and 2029.12
Current European treatment landscape in UC
27%
Other biologics
7%
JAKi
66%
Anti-TNF
Source: UC Therapy Watch (Research Partnership) Q3 2021. Share of prescriptions of advanced
therapies
10
11
12
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.
CAGR: compounded annual growth rate. Source: UC Therapy Watch
33
Galapagos NV Annual Report 2022
PORTFOLIO
Regulatory progress and commercialization of Jyseleca® in UC
Filgotinib obtained regulatory approval for the treatment of adults with moderate to
severe UC in the European Union in 2021, and in Great Britain and Japan in January and
March 2022, respectively.
Filgotinib is marketed as Jyseleca® in Europe and Japan for the treatment of adult
patients with moderate to severe active UC who have had an inadequate response with,
lost response to, or were intolerant to either conventional therapy or a biologic agent.
Jyseleca (filgotinib) 100mg and 200mg are registered in the above-mentioned territories.
and special warnings
The European Summary of Product Characteristics for filgotinib, which includes
contraindications
at
www.ema.europa.eu. The Great Britain Summary of Product Characteristics for
filgotinib can be found at www.medicines.org.uk/emc and the Northern Ireland
Summary
at
www.emcmedicines.com/en-GB/northernireland, respectively. The interview form
from the Japanese Ministry of Health, Labour and Welfare is available at
www.info.pmda.go.jp.
and precautions,
Characteristics
available
filgotinib
Product
found
can
for
be
of
is
Jyseleca® reimbursement in UC in Europe
Jyseleca® is marketed by Galapagos in Europe and is now reimbursed in 13 countries
in Europe (see graph below), including the major markets Great Britain, France and
Germany. In Central and Eastern Europe, Portugal, Greece and the Baltic countries, our
partner Sobi is responsible for the distribution and commercialization of Jyseleca®.
Gilead is responsible for the distribution and commercialization of Jyseleca® outside of
Europe, including in Japan where Jyseleca® is approved in UC and is co-marketed with
Eisai.
34
Galapagos NV Annual Report 2022
PORTFOLIO
Jyseleca® reimbursements in UC
Reimbursed (13 countries)
In progress
Eastern and Central Europe, Portugal, Greece, Baltic countries partnered with Sobi
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 etal. 2021) were published in The
Lancet.
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.
35
Galapagos NV Annual Report 2022
PORTFOLIO
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
Additionally, data from a post-hoc analysis of the maintenance study showed that 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) and 6-month corticosteroid-free clinical remission (27% versus 6%; p<0.01) as
shown in the graph below, and published in The Lancet(Feagan et al. 2021).
36
Galapagos NV Annual Report 2022
PORTFOLIO
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)
Furthermore in 2021, additional safety data from the SELECTION studies were presented
at the 16th European Crohn’s and Colitis Organisation (ECCO) 2021 virtual congress
(Schreiber etal.2021). 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 moderate to severe active UC.
In 2022, we presented a set of new data from the SELECTION study and SELECTION long-
term extension study in UC at the ECCO 2022 annual conference. The key findings were:
1. Continued treatment with filgotinib for up to an additional 96 weeks in the long-
term extension study was effective in maintaining long-term improvements in UC
symptoms;
2. Retreatment with filgotinib upon interruption resulted in recovery of efficacy in most
patients and filgotinib was well tolerated with no new safety concerns;
3.
4.
Filgotinib’s efficacy profile was consistent and the safety profile acceptable
regardless of the age group, analysing patients up to 75 years of age; and
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.
37
Galapagos NV Annual Report 2022
PORTFOLIO
In 2023, we presented additional new analyses from the SELECTION program with
filgotinib at the annual ECCO congress. These include new analysis from the long-term
extension (LTE) study evaluating the safety and efficacy of filgotinib in UC for nearly
four years; an analysis of the prolonged benefit of filgotinib in UC; an analysis exploring
factors associated with the partial Mayo Clinic Score (pMCS) over time; and analysis of
the effect of filgotinib on anaemia in UC patients. Additionally, we presented pooled
data from five Phase 2/3 trials, and two long-term extension trials of filgotinib designed
to further understand the safety profile of filgotinib in UC and RA. Data from the
SELECTIONLTE study showed that filgotinib 200mg maintained symptomatic remission
and health-related quality of life (HRQoL) for up to approximately four years. Amongst
subjects who completed the study, the reduction in mean pMCS in SELECTION was
maintained up to LTE Week 144. In non-responders, mean pMCS decreased from LTE
baseline to Week 192. The results also showed that a high proportion of completers
(>80% of patients) and non-responders (>70% of patients) achieved remission according
to the Inflammatory Bowel Disease Questionnaire13. The safety profile of filgotinib 200mg
in the SELECTIONLTE study was generally consistent with the safety profile observed in
previous SELECTION studies, with no new safety signals observed.
Filgotinib in Crohn’s disease (CD)
CD is an IBD of unknown cause, which results in chronic inflammation of the
gastrointestinal (GI) tract with a relapsing and remitting course.
FITZROY Phase 2 program in CD
The FITZROY Phase 2 trial evaluated the efficacy and safety of filgotinib 200mg once-
daily 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 TheLancet(Vermeire etal.
2016), the FITZROY Phase 2 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.
DIVERSITY Phase 3 program in CD
Gilead initiated the Phase 3 DIVERSITY trial with filgotinib in CD in November 2016, and
following our amended collaboration agreement with Gilead, Galapagos became the
sole sponsor of DIVERSITY (including all development costs) and the long-term extension
study, and the parties completed the transfer of all data to Galapagos in March 2023.
Under the terms of the amended agreement, Gilead made a one-time payment of
$15 million to Galapagos.
DIVERSITY consisted of a combined (induction and maintenance), double-blind,
placebo-controlled Phase 3 trial, enrolling 1,374 biologic-naive and biologic-experienced
patients with moderate to severe active CD in 384 centers worldwide. The primary
objectives of the trial were to evaluate the safety and efficacy of filgotinib 100mg or
200mg, once-daily oral treatments, versus placebo.
13
The Inflammatory Bowel Disease Questionnaire is a widely used questionnaire for HRQoL assessment in patients with inflammatory
bowel diseases.
38
Galapagos NV Annual Report 2022
PORTFOLIO
The co-primary endpoints at Week 10 and Week 58 were clinical remission per Patient
Reported Outcome (PRO-2) and endoscopic response per Simple Endoscopic Score for
Crohn’s Disease (SES-CD). Clinical remission measured by the Crohn’s Disease Activity
Index (CDAI) was a key secondary endpoint in the induction and maintenance phase
of the study. Additional secondary endpoints were clinical remission and endoscopic
response (combined into a single endpoint on a patient level) at Week 10, clinical
remission and endoscopic response (combined into a single endpoint on a patient level)
at Weeks 10 and 58, sustained clinical remission and endoscopic response at Weeks
10 and 58, and 6-month corticosteroid-free clinical remission at Week 58 (see graphic
below).
Induction Cohort A included biologic-naïve (54%) and biologic-experienced (46%)
patients; induction Cohort B included biologic-experienced patients. In total, 33% of
patients in Cohort A and 52% of patients in Cohort B had failed treatment with 3 or more
biologic drugs.
Induction endpoints week 10
• Clinical remission (CDAI <150)
• Endoscopic response (SES-CD score, reduction ≥50% from BSL)
Maintenance endpoints week 58
Baseline
week 11
Biologic-naïve
and
experienced
Biologic-
experienced
200mg
100mg
Placebo
200mg
100mg
Placebo
s
r
e
d
n
o
p
s
e
R
d
e
z
i
m
o
d
n
a
r
-
e
r
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
Long term
extension
study
On 8 February 2023, Galapagos announced topline results from the DIVERSITY study.
Both induction cohorts of the study failed to meet the co-primary endpoints of clinical
remission and endoscopic response for filgotinib, 100mg and 200mg once-daily. In the
maintenance phase of the study, a statistically significant higher proportion of patients
receiving filgotinib 200mg once-daily achieved the co-primary endpoints of clinical
remission (43.8% vs. 26.4%; p=0.0382) and endoscopic response (30.4% vs. 9.4%;
p=0.0038) compared to placebo at Week 58.
The safety observations of the study were in line with the underlying disease and were
consistent with the safety profile of filgotinib observed in previous studies across
indications.
39
Galapagos NV Annual Report 2022
PORTFOLIO
Based on these topline data, Galapagos decided not to submit a Marketing Authorization
Application in Europe for filgotinib in CD. The full results will be further analyzed to gain
valuable insights to guide future research efforts.
Our TYK2 program: GLPG3667
GLPG3667 is an investigational reversible and selective TYK2 kinase domain inhibitor
that was discovered by us and evaluated in a Phase 1 healthy volunteer study in 2020.
The 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 exvivo
with several cytokines, including IFNα, to analyze the level of inhibition of inflammation,
including the effect on phosphorylated signal transducer and activator of transcription
(pSTAT) signaling as well as hematological parameters,
lipids and creatine-
phosphokinase (CPK) (see graphs below).
'3667 is a potent, selective TYK2 inhibitor
)
%
(
e
s
o
d
e
r
p
1
d
s
v
n
o
i
t
i
b
h
n
i
i
T
A
T
S
p
20
0
-20
-40
-60
-80
-100
IFNα/pSTAT1
GM-CSF/pSTAT5
0
3
6
9
12
Time post-administration (h)
15
18
50
40
30
20
10
0
s
l
l
e
c
e
v
i
t
i
s
o
p
-
T
A
T
S
p
f
o
e
g
a
t
n
e
c
r
e
p
21
24
predose
3hr post-administration
IFNα/pSTAT1
IFNα/pSTAT3
IL-2/pSTAT5
‘3667 high dose (150mg QD) in HV for 14 days (n=6)
‘3667 high dose (150mg QD) in HV for 4 days (n=14)
Collected blood (day 10) triggered ex vivo with IFNα or GM-CSF
Blood collected at Tmax (3h post-administration) triggered
ex vivo with IFNα, IL-2
HV, healthy volunteer. Source: company data
40
Galapagos NV Annual Report 2022
PORTFOLIO
No effect on hematological parameters, lipids and CPK
Placebo
30mg ‘3667
90mg ‘3667
150mg ‘3667
Hemoglobin (g/L)
8
6
4
2
0
Neutrophils (109/L)
300
200
100
0
CPK (U/L)
BL
Day 2
Day 6
Day 8
Day 11
BL
Day 2
Day 6
Day 8
Day 11
BL
Day 2
Day 6
Day 8
Day 11
Lymphocytes (10 9/L)
Platelets(109/L)
600
400
200
0
Cholesterol (mmol/L)
10
8
6
4
2
0
BL
Day 2
Day 6
Day 8
Day 11
BL
Day 2
Day 6
Day 8
Day 11
BL
Day 2
Day 6
Day 8
Day 11
180
160
140
120
100
4
3
2
1
0
Mean values. Source: company data. CPK: creatine phosphokinase
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 response signal at Week 4 (see graph below):
At Week 4, four out of 10 patients in the high dose group had a Psoriasis Area and
Severity Index (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.
41
Galapagos NV Annual Report 2022
PORTFOLIO
GLPG3667: clinical activity in Psoriasis at Week 4
Phase 1b psoriasis study with '3667
Clinical activity at 4 weeks with once daily dosing
PASI 75
PASI 50
s
s
e
l
r
o
B
F
C
%
g
n
i
v
e
i
h
c
a
s
t
c
e
j
b
u
s
f
o
%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
–100%
–75%
–50%
–25%
0%
25%
PASI %CFB
‘3667 (150mg) (N=10)
‘3667 (50mg) (N=11)
Placebo (N=10)
CFB, change from baseline. Source: company data
*Papp et al, NEJM, 2018
One subject in the low dose group interrupted participation in the study for one day
due to 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.
Following these results, in 2022, we initiated the preparations for the Phase 2 studies with
GLPG3667 in dermatomyositis (DM) and systemic lupus erythematosus (SLE).
DM is the most common form of idiopathic inflammatory myopathies (IIM) and is
characterized by inflammatory and degenerative changes of the muscles and skin. IIMs
are a heterogenous group of rare autoimmune disorders primarily affecting the proximal
muscles. They are characterized by severe muscle weakness, muscle enzyme elevations,
inflammation on muscle biopsy, and extra-muscular manifestations. The quality of life of
patients with DM is impaired due to muscle weakness and pain, and skin disease activity.
14 The overall mortality ratio in DM patients also remains three times higher compared
to the general population, with cancer, lung, and cardiac complications and infections
being the most common causes of death.
The Phase 2 studies in DM and SLE are expected to start later in 2023.
14
Goreshi R, et al. Quality of life in dermatomyositis. J Am Acad Dermatol.2011 Dec;65(6):1107-16.
42
Galapagos NV Annual Report 2022
PORTFOLIO
Our SIK program
The Salt-Inducible Kinases (SIK) belong to a novel class of targets with immune-
modulatory function discovered in an inflammation phenotypic cell assay with our
proprietary target discovery platform. The search, identification, and validation for this
novel class of targets started with the ambition to find novel druggable targets with
a differentiating mechanism-of-action to develop new therapeutic candidates
demonstrating an improved efficacy and safety profile relative to existing therapies.
Although significant progress has been made with novel therapies in recent years, for
instance in psoriasis, the unmet need to manage chronic inflammatory diseases related
to joints, the bowel, and other organs remains an important objective in public health.
The SIK family, which includes 3 members SIK1, SIK2, and SIK3, has been shown to
contribute to biologic pathways across multiple immune cells. SIK inhibition has the
potential to reduce the production of pro-inflammatory cytokines coupled with
enhanced production of immunoregulatory mediators. This unique mechanism-of-
action offers the potential to restore the immune balance that is typically out of balance
in autoimmune diseases, and differentiate product candidates from existing therapies
that predominantly act by suppressing the immune system.
We have been focusing our medicinal chemistry efforts on these targets, delivering over
5,000 synthesized molecules, and more than 11 different chemical series with different
SIK-isoform selectivity profiles. The first lead molecule from this program, GLPG3970,
a selective SIK2/SIK3 inhibitor, has demonstrated a response across several disease
models that has led to the investigation of a series of early-stage clinical trials in psoriasis
(CALOSOMA), UC (SEA TURTLE), and RA (LADYBUG). The topline results for GLPG3970
were announced in July 2021.
Thorough analysis of clinical endpoints and exploratory biomarker research has
confirmed meaningful signals of biological activity in psoriasis and UC patients despite
short treatment duration and suboptimal PK properties. A second candidate, GLPG4399,
selective for SIK3, was tested in a Phase 1 healthy volunteer study but will not be further
pursued for clinical development.
SIK portfolio outlook
From the clinical studies described above 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 and GLPG4399 further 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. We are currently
performing medicinal chemistry activities with the goal to start preclinical development
with a selective SIK inhibitor later in 2023.
43
Galapagos NV Annual Report 2022
PORTFOLIO
CAR-T pipeline
GLPG5101 in refractory SLE
SLE is a female predominant,
relapsing and remitting autoimmune disease,
characterized by the formation of autoantibodies and immune complex–mediated
inflammation. This results in systemic progressive multiple organ damage, which is
associated with high morbidity and mortality.
Recently published data from a pilot study indicate that CAR-T cell therapy may have the
potential to achieve long-term drug-free SLE remission.15,16
Given our deep disease knowledge and expertise in the field of immunology and our
novel approach in the manufacturing of CAR-T therapies at the point-of care (see
ONCOLOGY section), we plan to initiate a Phase 1b patient study with our CD19 CAR-T
candidate, GLPG5101, later in 2023.
Oncology
Our differentiating approach
In 2022, we entered the field of oncology, CAR-T, and antibody-therapy research and
development through the acquisitions of CellPoint and AboundBio. The transactions
provide us with end-to-end capabilities in CAR-T therapy development and offer the
potential
for a paradigm shift in the space through the implementation of a
breakthrough, decentralized point-of-care manufacturing model, and cutting-edge fully
human antibody-based capabilities to design next-generation CAR-Ts and biologicals.
Point-of-care manufacturing
Despite continued progress with current CAR-T cancer therapies, long lead times, costly
central manufacturing and complex logistics continue to be limiting factors for large-
scale capacity and broad patient access.
To address important limitations of current CAR-T treatments, CellPoint (a Galapagos
company) has developed, in a strategic collaboration with Lonza, a novel decentralized
delivery model designed to manufacture non-frozen CAR-T therapies at the point-of-
care.
Through decentralized manufacturing, complex logistics and cryopreservation of the
cells can be avoided, and the average vein-to-vein time can be drastically reduced from
up to months for currently approved CAR-T therapies to 7 days with our CAR-T
candidates currently observed in our clinical trials.
15
16
Anti-CD19 CAR-T cell therapy for refractory systemic lupus erythematosus.
Mackensen A, Müller F, Mougiakakos D, et al. Nat Med. 2022 Sep 15.
CD19-targeted CAR-T cells in refractory systemic lupus erythematosus.
Mougiakako Ds , Krönke G Völkl S, et al. N Engl J Med. 2021 Aug 5;385(6):567-569.
44
Galapagos NV Annual Report 2022
PORTFOLIO
The proprietary platform consists of CellPoint’s end-to-end xCellit workflow
management and monitoring software and Lonza’s Cocoon®, a functionally closed,
automated manufacturing platform for cell therapies.
The novel point-of-care model is compliant with the EMA and FDA guidance for clinical
trials.
The Cocoon® Platform - Picture curtosy of Lonza
Increase patient access with point-of-care manufacturing
*vein to vein time: time between leukapheresis and infusion delivery at the hospital
45
Galapagos NV Annual Report 2022
PORTFOLIO
Streamlining CAR-T Therapy
Decentralized
point-of-care treatment
No shipment needed –
cells are stored and
generated at the hospital
Treatment is administered
to patients with minimal
wait time
Antibody engineering capabilities
AboundBio (a Galapagos company) has developed several very large, diverse human
antibody libraries in standard fragments of antigen binding (Fab), single-chain
variable fragments (scFv), and unique variable (VH) domain formats. The team can
rapidly (days to weeks) discover novel, high affinity, binders in multiple formats, engineer
them if needed to improve their developability properties, and convert them for multiple
uses including multi-specific, CARs, fusion proteins and antibody drug conjugates
(ADCs). The proprietary methodologies to build large fully-human antibody-based
libraries offer the potential to increase binder diversity, affinity and specificity; coverage
identifying a lead
of potential antigens; screening capacity; and probability of
therapeutic antibody candidate.
In the field of oncology, AboundBio provides unique research capabilities for next
generation CAR-T therapies that have the potential to deliver deeper and durable clinical
responses, as well as additional drug modalities beyond small molecules.
Our new generation of fully human, multi-specific CAR-T constructs have the potential to
transform patient outcomes through potentially more effective and longer-lasting care
options, even in the event of relapse after previous CAR-T-cell therapy. Together with
the decentralized CAR-T point-of-care manufacturing model, we aim to broaden patient
access and ultimately hope to change their lives.
46
Galapagos NV Annual Report 2022
PORTFOLIO
Scientific capabilities
CAR-T cells
Rapid Antibody
Discovery
(scFV, Fab, VH)
Proprietary library &
binder expertise
scFV, single-chain fragment variable; Fab, fragment antigen-binding; VH, heavy chain variable
domain
Pipeline CAR-T manufactured at point-of-care
GLPG5101: CD19 CAR-T in relapsed/refractory non-
Hodgkin’s lymphoma
Non-Hodgkin’s lymphoma (NHL) is a cancer originating from lymphocytes, a
type of white blood cell which is part of the body’s immune system. NHL can
occur at any age although it is more common in adults over 50 years old. Initial
symptoms usually are enlarged lymph nodes, fever, and weight loss. There are
many different types of NHL. These types can be divided into aggressive (fast-
growing) and indolent (slow-growing) types, and they can be formed from
either B lymphocytes (B cells) or in lesser extent from T lymphocytes (T cells)
or Natural Killer cells (NK cells). B cell lymphoma makes up about 85% of NHL
cases diagnosed in the US. Prognosis and treatment of NHL depend on the
stage and type of disease.
GLPG5101 is our second generation anti-CD19/4-1BB CAR-T product candidate,
administered as an intravenous infusion of a fresh product candidate in a single fixed
dose. Its feasibility, safety, and efficacy of point-of-care manufacturing are currently
being evaluated in the ATALANTA-1 Phase 1/2, open-label, multicenter study in patients
with relapsed/refractory non-Hodgkin lymphoma (rrNHL).
The primary objective of the Phase 1 part of the ATALANTA-1 study is to evaluate safety
and to determine the recommended dose for the Phase 2 part of the study. Secondary
47
Galapagos NV Annual Report 2022
PORTFOLIO
objectives include assessment of efficacy and feasibility of point-of-care manufacturing
of GLPG5101. The dose levels that are evaluated in the Phase 1 part are 50x106 (DL1),
110x106 (DL2) and 250x106 (DL3) CAR-T cells. The primary objective of the Phase 2 part
is to evaluate the objective response rate (ORR) while the secondary objectives include
complete response rate (CRR), duration of response, progression free survival, overall
survival, safety, pharmacokinetic profile, and feasibility of point-of-care manufacturing.
Each enrolled patient will be followed for 24 months.
ATALANTA CD19 CAR-T Phase 1/2a in rrNHL
Evaluating feasibility, safety and efficacy of point-of-care CD19 CAR-T
Ph1 - dose escalation (n=15)
Ph2 - dose expansion (n=30/cohort)
DL1 ‘5101 (low)
DL2 ‘5101 (medium)
DL3 ‘5101 (high)
‘5101 pivotal dose
Screening
Leukapheresis
‘5101 CD19 CAR-T
Single infusion
Follow-up
visits
‘5101 CD19 CAR-T
Single infusion
Follow-up
visits
D-x
D-7
D-6 – D-4: Patient conditioning
Manufacturing
& QC release
D0
D28, every 3M
D0
D28, every 3M
DL, dose level; rrNHL, refractory/relapsed non-Hodgkin lymphoma. Start of dose expansion in
2023 pending regulatory approval
In December 2022, we presented initial data from the ATALANTA-1 Phase 1 study during
a poster session at the 64th Annual American Society of Hematology (ASH) Congress in
New Orleans, Louisiana. The initial results from 7 patients that were eligible for efficacy
evaluation (ATALANTA-1 Phase 1 study cut-off date: 8 November 2022) indicated that
a 7-day vein-to-vein time was feasible and demonstrated strong and consistent invivo
CAR-T expansion levels. Moreover, the initial efficacy results were encouraging with an
observed ORR of 86% and a complete response (CR) observed in all responding patients.
A duration of response of up to 7 months has been reported and follow-up is ongoing.
Two patients who received DL1 that progressed, after initial stable disease or CR
respectively, had a CD19-negative escape. No CD19-positive relapses have been
observed.
In the initial safety analysis of these 7 patients, adverse events were consistent with
the known toxicities of CD19 CAR-T treatment. No grade 3 or higher cytokine release
syndrome (CRS) or immune effector cell-associated neurotoxicity syndrome (ICANS) was
observed in any of the patients. At DL2, CRS grade 1 or 2 was reported in 4 patients and
ICANS grade 1 was reported in 3 patients. Patients at DL1 did not experience any grade of
CRS or ICANS. Dose-limiting toxicity (neutropenia grade 4 for >21 days) was observed in 1
patient (DL2) and the majority of grade ≥3 adverse events were hematological toxicities.
48
Galapagos NV Annual Report 2022
PORTFOLIO
The study is currently enrolling rrNHL patients in Europe and the first expansion cohort
for Mantle Cell Lymphoma, a form of NHL, is currently open for recruitment. We aim to
provide Phase 1 topline results around mid-2023.
GLPG5201: CD19 CAR-T in relapsed and refractory chronic
lymphocytic leukemia
Chronic lymphocytic leukemia (CLL) is one of the chronic lymphoproliferative
disorders (lymphoid neoplasms). It is characterized by the excessive and
uncontrolled proliferation of functionally incompetent B lymphocytes from
lymphocyte leukemia (SLL) are
monoclonal origin. CLL and small cell
essentially the same type of B-cell non-Hodgkin lymphoma (NHL), with the
only difference the location where the primary cancer occurs. CLL affects B-
cells in the blood and bone marrow and SLL cancer cells are located in lymph
nodes and/or the spleen. Richter’s Transformation (RT) is an uncommon
clinicopathological condition observed in patients with CLL. It is characterized
by the sudden transformation of the CLL into a significantly more aggressive
form of large cell lymphoma, and occurs in approximately 2 – 10%16 of all
CLL patients. CLL/SLL usually follows an indolent course and is an incurable
disease. Patients who develop relapsed and refractory disease and become
resistant to new agents have a dismal prognosis and a high unmet medical
need for new therapeutic options such as CAR-T cells. With an estimated
incidence rate of 4.7 new cases per 100,000 individuals, CLL/SLL are the most
prevalent lymphoid malignancies and the most common forms of adult
leukemia in the US and in Europe17.
EUPLAGIA-1 is an ongoing Phase 1/2 study in heavily pre-treated patients with rrCLL and
rrSLL, with or without RT, to evaluate the safety, efficacy, and feasibility of GLPG5201, a
non-frozen CD19 CAR-T product candidate manufactured at point-of-care.
GLPG5201 is our second generation anti-CD19/4-1BB CAR-T product candidate,
administered as an intravenous infusion of a fresh product candidate in a single fixed dose.
Patients with CD19 rrCLL or rrSLL with >2 lines of therapy are eligible to participate, and
patients with RT are eligible regardless of prior therapy. The primary objective of the
Phase 1 part of the study is to evaluate safety and determine the recommended dose
for the Phase 2 part of the study. The dose levels that are evaluated in the Phase 1
part of the study are 35x106 (DL1), 100x106 (DL2) and 300x106 (DL3) CAR+ viable T cells.
The primary objective of the Phase 2 part of the study is to assess the ORR and the
secondary objectives include the analysis of the CRR, duration of response, progression
free survival, overall survival, safety pharmacokinetic profile, and feasibility of point-of-
care manufacturing.
16
17
CD19-targeted CAR-T cells in refractory systemic lupus erythematosus.
Mougiakako Ds , Krönke G Völkl S, et al. N Engl J Med. 2021 Aug 5;385(6):567-569.
Siegel RL, Miller KD, Fuchs HE, Jemal A. Cancer Statistics, 2021. CA: A Cancer Journal
https://www.ncbi.nlm.nih.gov/books/NBK493173
for Clinicians. 2021;71(1):7-33.
49
Galapagos NV Annual Report 2022
PORTFOLIO
We presented initial encouraging safety and efficacy data from the EUPLAGIA -1 Phase
1 study during a poster session at the EBMT-EHA 5th European CAR-T-cell Meeting in
Rotterdam in February 2023 (EUPLAGIA-1 Phase 1 study data cut-off date: 9 January
2023). At the moment of analysis on 9 January 2023, 7 patients diagnosed with rrCLL (4
patients of which have RT) were enrolled in the study (n=4 at dose level 1 (DL1); n=3 at
dose level 2 (DL2). All patients received GLPG5201 as a fresh infusion with a median vein-
to-vein time of 7 days.19
The initial results from these 7 patients that were eligible for efficacy analysis (EUPLAGIA
-1 Phase 1 cut-off date: 9 January 2023) indicated that a 7 day vein-to-vein time was
feasible and that the 'fresh' CAR-T product candidate demonstrated strong and
consistent in vivo CAR-T expansion levels. Moreover, the initial efficacy results were
encouraging with an observed ORR of 100%. A CR was observed in 6 out of 7 patients
(86%) and in all 4 patients with RT. A duration of response of up to 7.9 months has been
reported and follow-up is ongoing. Only 1 patient (DL1) progressed (progressive disease
after partial response, (PR)) and had a CD19-negative relapse with confirmed Richter’s
transformation.
In the safety analysis of these 7 patients, adverse events were consistent with the known
toxicities of CD19 CAR-T treatment. None of the patients experienced a cytokine release
syndrome (CRS) higher than grade 2 at both dose levels and no immune effector cell
associated neurotoxicity syndrome (ICANS) was reported. No dose limiting toxicities
(DLTs) were reported and the majority of grade ≥3 adverse events were hematological.
Only one serious adverse event was reported at DL2 with a patient experiencing a CRS
grade 2, but the event was resolved after 7 days.
The EUPLAGIA-1 study is continuing to enrol rrCLL and rrSLL patients in Europe,
including patients with RT, and we aim to provide Phase 1 topline results around
mid-2023.
EUPLAGIA CD19 CAR-T Ph1/2a in r/rCLL
Evaluating feasibility, safety and efficacy of point-of-care CD19 CAR-T
Ph1 - dose escalation (n=15)
Ph2 - dose expansion (n=30/cohort)
DL1 ‘5201 (low)
DL2 ‘5201 (medium)
DL3 ‘5201 (high)
‘5201 pivotal dose
Screening
Leukapheresis
‘5201 CD19 CAR-T
Single infusion
Follow-up
visits
‘5201 CD19 CAR-T
Single infusion
Follow-up
visits
D-x
D-7
D-6 – D-4: Patient conditioning
Manufacturing
& QC release
D0
D28, every 3M
D0
D28, every 3M
DL, dose level; r/rCLL, relapsed/refractory chronic lymphocytic leukemia
19
N. Martinez-Cibrian , S. Betriu , V. Ortiz-Maldonado , D. Esteban , L. Alserawan , M. Montoro , A.D. Van Muyden , M. Spoon , M.J Pont , C.
Jacques , J.Delgado (2023, February 9-11) InitialclinicalresultsofEuplagia-1,aPhaseI/IITrialofPoint-of-CareManufacturedGLPG5201
inR/RCLL/SLLwithorwithoutRichter’stransformation [Poster presentation]. EBMT-EHA 5th European CAR T-cell Meeting, Rotterdam,
the Netherlands
50
Galapagos NV Annual Report 2022
PORTFOLIO
GLPG5301: BCMA CAR-T in relapsed and refractory multiple
myeloma
Multiple myeloma (MM)
is typically characterized by the neoplastic
proliferation of plasma cells producing a monoclonal immunoglobulin. The
plasma cells proliferate in the bone marrow and may result in extensive
skeletal destruction with osteopenia, and osteolytic lesions with or without
pathologic fractures. The diagnosis of MM is made when one (or more) of
the following clinical presentations are present: bone pain with lytic lesions
discovered on routine skeletal films or other imaging modalities, an increased
total serum protein concentration with the presence of a monoclonal protein
in the urine or serum, and anemia, hypercalcemia or renal failure. The patient
may be either symptomatic or their disease may be discovered incidentally.
PAPILIO-1 is a Phase 1/2, open-label, multicenter study to evaluate the feasibility, safety,
and efficacy of point-of-care manufactured GLPG5301, our BCMA CAR-T product
candidate, in patients with relapsed/refractory multiple myeloma (rrMM).
GLPG5301 is a second generation anti-BMCA/4-1BB CAR-T product candidate,
administered as an intravenous infusion of a fresh product candidate in a single fixed
dose. Each enrolled patient will be followed for 24 months.
The primary objective of the Phase 1 part of the PAPILIO-1 study is to evaluate safety
and determine the recommended dose for the Phase 2 part of the study. Secondary
objectives of the Phase 1 part of the study include assessment of efficacy and feasibility
of point-of-care manufacturing of GLPG5301.
The primary objective of Phase 2 of the study is to evaluate the ORR while the secondary
objectives include assessment of CRR, duration of response, progression free survival,
overall survival, safety, pharmacokinetic profile, and feasibility of point-of-care
manufacturing.
We expect to start enrolling patients with rrMM in Europe in the second quarter of 2023.
51
Galapagos NV Annual Report 2022
Risk factors
Description of the risks
investors should be aware of
Forward with Purpose
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 and UC in Europe, and Japan.
The commercial success of filgotinib and of any future products, if approved, will depend
upon the degree of market acceptance by physicians, healthcare payers, patients, and
the medical community. Market acceptance will depend on a number of factors, many of
which are beyond our control, but not limited to (i) the wording of the product label, (ii)
changes in the standard of care for the targeted indications for any product and product
candidate, (iii) acceptance by physicians, patients and healthcare payers of the product
as safe, effective and cost-effective and (iv) sales, marketing and distribution support.
We have limited experience in the sale or marketing of pharmaceutical products and
have build and continue to further develop a marketing and sales organization. We have
established our own sales force in several European countries. We expect to continue
to invest significant financial and management resources to continue to build these
capabilities and to establish a European commercial infrastructure or to enter into
collaboration arrangements with third parties to outsource the distribution or
commercialization, such as SOBI, our distribution and commercialization partner in
Eastern and Central Europe, Portugal, Greece, and the Baltic countries for filgotinib.
Recruiting and training a sales force is expensive and costs of creating an independent
sales and marketing organization and of marketing and promotion could be above those
anticipated by us. 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, which in turn would have a material adverse effect on our business,
financial condition, and results of operation.
Further, to the extent that Gilead is commercializing filgotinib in one or more
jurisdictions or a third party, such as Eisai, is commercializing filgotinib in one or more
jurisdictions, we are significantly dependent on their successful accomplishment of
commercialization efforts.
Coverage and reimbursement decisions by third-party payers may have an adverse
effect on pricing and market acceptance. Legislative and regulatory activity, including
enacted and future legislation, 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.
53
Galapagos NV Annual Report 2022
RISK FACTORS
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 Executive Committee; they are
discussed with the Board of Directors at least once per quarter, and the members of our
Board of Directors 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 and during
financial year 2022 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 filgotinib. We are also dependent on the
success of our other product candidates, such as GLPG3667, GLPG5101, GLPG5201 and
GLPG5301. During 2022, we shifted from novel target-based discovery to patient-focused
medical need research and development with a focus on our key therapeutic areas of
immunology and oncology. Filgotinib is approved for use in RA and UC in the European
Union, Great Britain and Japan. In addition, we are heavily investing in our early-stage
product candidate pipeline, including our SIK early-stage compounds, and these 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. Through the acquisitions of CellPoint and AboundBio, we gained access
to innovative, scalable, decentralized and automated point-of-care cell therapy supply
model as well as a fully human antibody-based therapeutics platform. We are heavily
investing in building our therapeutic area of oncology, whereby cell therapies are novel,
complex, and difficult to manufacture and require rigorous preclinical and clinical
testing, the results of which are uncertain.
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 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, including our CD19 CAR-T 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.
54
Galapagos NV Annual Report 2022
RISK FACTORS
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, including its financial condition, 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 of our product candidates are found to be unsafe or have a 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 enrollment. Patient enrollment 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 or unacceptable 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 and may adversely impact the viability of
our other product candidates or preclinical programs.
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. As
a result, filgotinib may have a labeling statement warning for male patients. Adjacent to
the filgotinib Phase 3 programs, we and Gilead were conducting dedicated male semen
analysis studies in CD and UC patients (MANTA) and in RA, PsA, and AS, patients (MANTA-
RAy). In March 2021, we reported on the primary endpoint with the MANTA and MANTA-
RAY studies. Following submission of a type II variation application to the EMA and
assessment of the data by the CHMP, a positive opinion has been issued in October 2022
by the CHMP to update the European label of filgotinib whereby the language in the
55
Galapagos NV Annual Report 2022
RISK FACTORS
section of the Special Warnings and Precautions about the potential effect of filgotinib
on sperm production and male fertility was removed from the Summary of Product
Characteristics (SmPC). Such labeling statement warnings or changes of such labeling
statement warnings may harm the commercialization of our product candidates and our
business.
Even now when filgotinib has received regulatory approval or marketing authorization
in previously mentioned 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.
the European Medicines Agency’s (EMA) announced that
In February 2022,
its
Pharmacovigilance Risk Assessment Committee (PRAC) initiated 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. In November 2022, the EMA's Committee for Medicinal Products
for Human Use, CHMP, adopted the recommendation of the PRAC to add measures to
minimize risk of serious side effects with JAK inhibitors used for chronic inflammatory
disorders, followed by the approval of the European Commission on 10 March 2023.
If such safety review(s) result(s) in amendments to the marketing authorization for
filgotinib, or 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 or maintain 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. Even if we are able
to obtain orphan designation, we may not be the first to obtain marketing approval
for such indication due to the uncertainties associated with developing pharmaceutical
products. Orphan drug designation neither shortens the development time or regulatory
review time of a drug nor gives the drug any advantage in the regulatory review or
approval process.
We must establish and maintain a pharmacovigilance system, including a qualified
person responsible for oversight, submit safety reports to the regulators and comply
with the good pharmacovigilance practice guidelines adopted by the relevant regulatory
authorities. Failure to comply with these guidelines may harm our clinical trials or
regulatory process and by extension, our business.
If the FDA, EMA, or any other comparable regulatory authority approves any of our
product candidates, the manufacturing processes, distribution, adverse event reporting,
56
Galapagos NV Annual Report 2022
RISK FACTORS
storage, advertising, and recordkeeping for the product will be subject to extensive and
ongoing regulatory requirements, which currently is applicable for filgotinib. These
requirements include submissions of safety and other post-marketing information and
reports, registration requirements and continued compliance with current good
manufacturing practices, or cGMPs, and good clinical practices, or GCPs, for any clinical
trials that we conduct post-approval. Failure to comply with the aforementioned
practices may harm our clinical trials or regulatory process and by extension, our
business, financial condition and prospects.
Risks related to our financial position and
need for additional capital
We are an integrated biopharmaceutical company with a first and single commercial
launch and have not yet generated significant income. We have only very recently
commenced our transition from a clinical-stage to commercial-stage company. Until our
first commercial launch, our operations 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. Our losses resulted principally from costs incurred in research and
development, preclinical testing, clinical development of our product and our product
candidates as well as costs incurred for research programs, (pre-)commercial activities
and from general and administrative costs associated with our operations. 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 we will generate future profits from the sales of filgotinib, our
first product which was approved for commercialization in the European Union, Great
Britain and Japan. 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.
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, if approved.
Our ability to raise additional funds will depend on financial, economic and market
conditions and other factors, over which we may have no or limited control. 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 34 of the notes to the
consolidated financial statements.
57
Galapagos NV Annual Report 2022
RISK FACTORS
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 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. To the extent that Gilead is commercializing filgotinib in one or more
jurisdictions via a third party, such as Eisai for certain Asian markets, we are significantly
dependent on their successful accomplishment of commercialization efforts.
In addition, the terms of 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 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
58
Galapagos NV Annual Report 2022
RISK FACTORS
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.
We may not be successful in establishing future development and commercialization
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.
Developing pharmaceutical products, conducting clinical trials, obtaining regulatory
approval, 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
59
Galapagos NV Annual Report 2022
RISK FACTORS
or unaddressed 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.
In October 2021, we signed an agreement (as amended from time to time) with Sobi
regarding the distribution of Jyseleca®. Sobi acts as our distribution and
commercialization partner of filgotinib and will distribute the medicine in Central and
Eastern Europe, Greece, Portugal, and the Baltic countries. Launches and first sales of
filgotinib in the aforementioned countries trigger milestone payments by Sobi to us. We
are significantly dependent on Sobi's successful accomplishment of commercialization
efforts, and if, for any reason, the collaboration terminated, we may be unable to timely
or successfully find another distribution and commercialization partner, which may
interrupt or delay our commercialization efforts.
Through the acquisitions of CellPoint and AboundBio, we gained access to an innovative,
scalable, decentralized and automated point-of-care cell therapy supply model as well
as fully human antibody-based therapeutics platform and research capabilities for novel,
differentiated CAR-T constructs. To address important limitations of current CAR-T
treatments, CellPoint has developed, in a strategic collaboration with Lonza, a Swiss
manufacturing company for the pharmaceutical, biotechnology and nutrition sectors,
a novel decentralized delivery model designed to manufacture non-frozen CAR-T
therapies at the point-of-care. The platform consists of CellPoint’s end-to-end xCellit
workflow management and monitoring software and Lonza’s Cocoon®, a functionally
closed, automated manufacturing platform for cell therapies. Clinical studies with this
decentralized supply model have been approved by regulatory authorities in Belgium,
Spain, and the Netherlands. If, for any reason, the collaboration is terminated or is
otherwise materially changed and we are no longer entitled to use such technology
platform, then we may be unable to secure alternatives to such technology and, our
research, development or other efforts may be interrupted or delayed, and our financial
condition and results of operation may be materially adversely affected.
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
60
Galapagos NV Annual Report 2022
RISK FACTORS
trials in accordance with the applicable protocols and applicable legal, regulatory and
scientific standards, including Good Clinical Practices (GCPs). Regulatory authorities
enforce these GCPs through periodic inspections of trial sponsors, investigators and
clinical sites. If CROs do not successfully carry out their contractual duties or obligations
or meet quality standards, regulatory requirements or expectations, such as the
applicable GCPs, our clinical trials may be extended, delayed or terminated, the clinical
data generated in our clinical trials may be deemed unreliable and regulatory authorities
may require us to perform additional clinical trials before approving our marketing
applications 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. In addition to
GCPs, our clinical trials must be conducted with products produced under current Good
Manufacturing Practice (cGMP) regulations.
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 and innovation. Our competitors may
now or in the future 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.
These third parties compete with us in recruiting and retaining qualified scientific and
management personnel, establishing clinical trial sites and patient registration for
clinical trials, as well as in acquiring technologies complementary to, or necessary for,
the development of our product and product candidates. If we, our product and product
candidates or our technology platforms do not compete effectively, it is likely to have a
material adverse effect on our business, financial condition and results of operation.
61
Galapagos NV Annual Report 2022
RISK FACTORS
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 and product candidates, as well as successfully defending these rights against
third party challenges. We will only be able to protect our product and 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, product, product candidates 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 and 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 and product candidates in all
countries and jurisdictions throughout the world would be prohibitively expensive, and
62
Galapagos NV Annual Report 2022
RISK FACTORS
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.
Risks related to our organization, structure
and operation
Our future success depends on our ability to retain the members of our Executive
Committee, and to attract, retain and motivate qualified personnel to develop our
business if we expand into the fields that will require additional skills and expertise,
including oncology. If we are not successful in attracting and retaining highly qualified
personnel, we may not be able to achieve our objectives and successfully implement
our business strategy, which could have a material adverse effect on our business and
prospects. Attractive development and training programs, adequate remuneration and
incentive schemes, and a safe and healthy work environment mitigate this risk as they,
among others, induce valuable qualified personnel to continue their employment or
services with our business.
We expect that if we continue to build our development, medical and commercial
organizations, including in the field of oncology, 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, expand our internal organization, systems,
controls and facilities to accommodate additional anticipated growth, and upon our
management developing and implementing strategies for our business to realize these
objectives. 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 have limited experience in the field of oncology, and continue to build our
therapeutic area of oncology. We expect to invest significant financial and management
resources to continue to build these capabilities and to establish such therapeutic area
within our business. In June 2022, we acquired CellPoint and AboundBio with the aim
to enter the space of oncology. Through such acquisitions, we believe we reinforced
our portfolio by gaining access to an innovative, scalable, decentralized and automated
point-of-care cell therapy supply model as well as fully human antibody-based
therapeutics platform. Cell therapies are novel, complex, and difficult to manufacture,
and we may not be successful in our efforts to develop and commercialize such
therapies,
in which case our financial condition and results of operation may be
materially adversely affected. The manufacturing processes that we use to produce
product and our product candidates for human therapeutics are complex, novel and
have not been validated for commercial use. Several factors could cause production
interruptions,
limitation) equipment malfunctions and facility
contamination. Problems with the manufacturing process, even minor deviations from
including (without
63
Galapagos NV Annual Report 2022
RISK FACTORS
the normal process, could result in product defects or manufacturing failures that can
result in lot failure or product liability claims.
We remain 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.
We must have a robust quality management system and team in place to ensure
(continued) compliance with current good laboratory practices, current good
manufacturing practices and current good clinical practices. If we are unable to comply
with these practices, this may harm our clinical trials or regulatory process and by
extension, our business.
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, and thus we have a
process to identify and mitigate threats by policies and procedures such as surveillance
of the buildings, annual appraisals and bonuses, and monthly management meetings.
Moreover, despite our efforts, the possibility of these events occurring cannot be
eliminated entirely, and there can be no assurance that any measures we take will
prevent cyber-attacks (including phishing attempts or e-mail fraud to cause payments or
information to be transmitted on an unintended recipient), security breaches or similar
attacks or breaches that could adversely affect our business.
We have to comply with applicable data privacy laws, including the European General
Data Protection Regulation (GDPR), which, among others, 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 personal data. 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
including the GDPR, and significant regulatory penalties, disrupt our
information,
operations and damage our reputation. Any of the foregoing could materially harm our
business, prospects, financial condition, and results of operation.
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 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
64
Galapagos NV Annual Report 2022
RISK FACTORS
requirements, which may give rise to liability, lead to the loss of trade secrets or other
intellectual property, 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. As our programs may require the use of
property rights held by third parties, the growth of our business will likely depend in part
on our ability to acquire, license-in or use these proprietary rights. We may be unable to
acquire or in-license any third-party proprietary rights that we identify necessary for our
drug candidates, for whatsoever reason. 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 adversely affect our activities,
financial situation and results. Such potential changes and their impact are monitored
carefully by our management and 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, the
French or the Dutch governments decide to eliminate, or reduce the scope or the rate of,
the research and development incentive benefits, either of which they 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 down to 3.75%. At 31
December 2022 we had €346.2 million of carry-forward innovation income deduction in
Belgium.
65
Galapagos NV Annual Report 2022
RISK FACTORS
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 from an agency of the
Flemish government to support various research programs and technological innovation
in Flanders. 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, which could adversely affect our ability to finance our research and
development projects.
We annually establish a detailed budget that is submitted to the Board of Directors
for review and approval. Our performance compared to the budget is continuously
monitored by our Executive Committee, and is discussed with the Board of Directors
at least once per quarter. For the establishment of our financial information, we have
processes and methods in place that enable the preparation of non-consolidated and
consolidated financial statements for our annual and quarterly reporting. Our
management reporting systems – which include an advanced integrated Enterprise
Resource Planning (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 information technology or
computer system failures. We may suffer data leaks, security incidents or become the
target of cyber-attacks, as a result of which our financial assets, confidential information
and/or intellectual property may be materially negatively impacted. We may not be
able to successfully protect our information technology or computer systems against
unauthorized access by third parties.
The occurrence of unforeseen or catastrophic events, including extreme weather events
and other acts of god or natural disasters, man-made disasters, electricity or
telecommunication interruption, geopolitical an and other economic and political
events or conditions (such as the armed conflict between Russia and Ukraine), or the
emergence of epidemics or diseases, 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, epidemics or diseases, 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, operations and financial performance cannot be precisely
determined or quantified, and will depend on future developments, but governmental
measures in order to control the spread of the virus 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,
continuing 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.
66
Galapagos NV Annual Report 2022
RISK FACTORS
The armed conflict between Russia and Ukraine could cause a disruption in our
operations, including clinical development activities and clinical trials. We currently have
no clinical studies that are enrolling patients in Ukraine and Russia.
If our CROs
experience significant or extended 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 pivotal studies such as DIVERSITY has remained 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 CROs’ and our
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. This 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
conflict and the associated specific regulatory, institutional, and government guidance
and policies.
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's control, such as, without limitation, the global economic situation,
the business development of competitors, and sector mergers and acquisitions; it is
difficult to mitigate these risk.
Economic risk due to failure in confidence
General public confidence about future economic conditions or performance of us,
our business, 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 would be
diluted.
Dilution through exercise of subscription right plans
The exercise of existing subscription rights can significantly increase the number of
outstanding Galapagos shares.
67
Galapagos NV Annual Report 2022
RISK FACTORS
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 Conduct
and our Anti-Bribery and Anti-Corruption Policy.
Belgian law provisions
There are several provisions of Belgian company law and certain other provisions
of Belgian law, such as, without limitation, 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).
General statement about Galapagos’ risks
According to our current assessment and knowledge, we consider the major 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 prepared to meet future challenges.
68
Galapagos NV Annual Report 2022
Sustainability
report
Our commitment to society:
Forward, Sustainably
Forward with Purpose
SUSTAINABILITY REPORT
Letter from the CEO – Our Sustainability
Commitment –Forward, Sustainably
Since our founding more than two decades ago, we have worked to discover, develop, and
commercialize life-changing medicines to add years of life and quality of life for people around the
world. Our focus on, and commitment to, patients will always remain at the center of everything we
do.
We believe that the quality of life for people living with serious diseases is supported by the health of
ourplanetandthewellbeingofouremployees.Thatiswhytoday,weareextendingourcommitment
to patients by evolving the way we pursue breakthroughs in science and the development of
innovative medicines by adopting new strategies and performance metrics to improve the health of
our environment, the wellbeing and engagement of our employees, and the ethical and transparent
management of our operations.
Asacompany,wefirmlybelievethatwehavetoembracenewwaystomove“Forward,Sustainably”.
In2022,wedecidedtobuildonourkeypillarsandachievementsandfurtherevolveoursustainability
approach to better respond to current opportunities and expectations.
Pillars of Sustainability
70
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Supported by the members of the Executive Committee, we established a Sustainability Steering
Committee, comprised of representatives from all departments throughout our organization, and
we completed a new materiality analysis. The materiality analysis informs our efforts and allows us
to focus our Sustainability ambitions on those areas where we can have the greatest influence and
make positive impact: Our Patients, Our People, Planet, and Trust & Transparency.
OurnewapproachtoSustainabilityisencapsulatedintheprinciple“Forward,Sustainably”,designed
to accelerate progress in our mission to bring more years of life and more quality of life to people
around the world. It’s about being ethical and innovative in everything we do, from research and
development, to workplace, culture, and leadership. We know that acting as a responsible and
sustainable business is key to our success as we continue to focus on the needs of patients who trust
and depend on us.
I am proud of all our employees who work hard to embrace the principles behind our Sustainability
pillars on a daily basis, and act as ambassadors for our company and values.
Respectfully,
Dr.Paul Stoffels
CEO and Chairman of the Board of Directors
Our Materiality Assessment
Driven by our purpose to transform patient outcomes through life-changing science and
innovation, we recognize that our activities have an impact that reaches well beyond our
financial performance.
To determine our key goals and priorities, we conducted a new materiality assessment in
2022, allowing us to identify the topics that are most relevant to our internal and external
stakeholders. The analysis also enabled us to capture our current and potential impact
on society and the world, and to effectively track areas in view of emerging challenges
and opportunities.
To enhance the value of the materiality assessment, we updated the methodology we
applied for the 2018 materiality assessment and significantly increased the number
of stakeholders participating in the assessment. Externally we engaged with
representatives from patient organizations, patient experts, healthcare providers, supply
chain partners, our collaboration partners, and investors. Internally, next to the members
of our Executive Management and our Sustainability Steering Committee, all Galapagos
71
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
employees were given the opportunity to provide input regarding the materiality of
certain topics through a company-wide survey.
Internal and external stakeholders were invited to review a list of 35 potential material
topics and to identify five topics they found most relevant, five topics they found less
important for Galapagos and our core mission, and if any topic was missing.
The initial results further confirm the results from previous years with the top three pillars
clustered around People, Planet, and Trust & Transparency with one main change: the
desire to add a new pillar dedicated to Innovation for Patients.
We therefore adapted our focus areas and the four pillars as presented in the below
materiality map.
Patients
Our People
Planet
Trust &
Transparency
Data Privacy &
Information Security
h
g
i
H
l
s
r
e
d
o
h
e
k
a
t
s
l
a
n
r
e
t
x
E
w
o
L
(Scientific) Innovation
Climate Change
(Renewable Energy &
Green House Gas
emissions)
Product Portfolio and R&D
Access and affordability
of medicines
Health
education
Employment
Diversity and
Equal opportunity
Occupational Health, Safety and Wellbeing
Patient Safety
(incl. Product Quality)
Low
Internal stakeholders
High
72
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Our Ambition
Following our materiality assessment, in 2023, we aim to identify KPIs and set targets to
reach our 2028 call for action, as depicted in the graph below.
Our call for action by 2028
Add more years of life and
quality of life for patients
Develop pivotal stage ther-
apies for patients, with
patients and the health-
care community
Provide patients access to
our medicines across
all continents
Be a diverse, equitable
and inclusive,
and trusted organization
Be climate neutral
Our Sustainability Governance
In 2022, supported by the members of our Executive Committee, we established a
Sustainability Steering Committee, comprised of representatives from all departments
within our organization. The Sustainability Committee ensures that environmental,
social and governance considerations are fully integrated into the decision-making
processes,
including those related to the business strategy, key investments, and
performance. Our Sustainability Committee manages and coordinates the relevant
activities, and is responsible for the publication of related information and data. The
Committee consists of members of senior management and experts in the relevant
fields, including Compliance, Patient Advocacy, Legal, Finance, Environment, Health &
Safety (EHS), Procurement, Human Resources, Site Operations, Investor Relations, and
Communications.
The Executive Committee oversees the Sustainability Committee and approves both
the measures and operational structure related to Sustainability. In addition, our Board
of Directors, supported by the Audit Committee, oversees the Sustainability oversight
structure as well as the strategy for public disclosure with respect to ESG matters.
73
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Reporting framework
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 strive to ensure that all people enjoy peace and prosperity by 2030.
We are preparing detailed reporting on our material aspects according to the Corporate
Sustainability Reporting Directive (CSRD) and anticipate reporting as of full year 2024 in
line with EU Sustainability Reporting Standards (ESRS).
The current sustainability 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. Together they will help us to execute on our commitment
to our four Sustainability 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
More years of life and quality of life by transforming patient
outcomes through accelerating life changing science and
innovation 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
74
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
ENABLING SDG
Quality education
We invest in our employees and foster an inclusive, open and
supportive work environment across our 15 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 15 locations in Europe and the U.S.
Industry, innovation and infrastructure
innovation
Our mission is to accelerate transformational
through the relentless pursuit of groundbreaking science, our
entrepreuneurial spirit, and a collaborative mindset
Reduced inequalities
We aim to develop a balanced workforce across a number of
criteria, including gender, nationality, ethnicity, experience and
disability
Climate action
We value our planet and take initiatives to safeguard the
environment and incorporate greener practices across our
organization
75
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Our Pillars
At Galapagos, our commitment to society has always played a central role since our
founding and is intrinsically linked to our mission to accelerate transformational
innovation for patients through the relentless pursuit of groundbreaking science, our
entrepreneurial spirit and a collaborative mindset.
Pillars of Sustainability
76
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Patients
Our
Commitment
to Patients
We are engaged: Our commitment to developing
transformational medicines For Patients, With Patientsand
the healthcare community
At Galapagos, our therapeutic programs are driven by patients’ needs, designed to
pioneer best-in-disease therapeutics, and developed through active engagement with
patients and the healthcare community.
founding, we have valued pioneering approaches
Since our
to advancing
transformational medicines for diseases with significant unmet medical needs. Our
commitment to improving the lives of people worldwide is reflected from our innovative
research to our product development and providing patient access to our innovative
medicines.
That is why we value continued improvement in our research, development, and access
approaches, in an unwavering focus on outcomes with the greatest value to patients.
It is why we embrace change and support disruptive innovation, aim to build a culture
of responsible innovation throughout the entire medicine lifecycle and are committed
to enable the safe and appropriate use of our medicines as they are prescribed by
physicians and used by patients in the medical practice.
We focus our development efforts on areas where we have deep expertise and map out
the critical path towards market with the goal of reducing the time it takes to bring new
medicines to the patients who need them.
At every stage of the patient journey, we aim to pioneer for patients by working in
close partnership with patients and patient organizations, starting with the design of our
clinical studies.
77
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
We therefore co-developed our Patient Partnership Charter in 2021 with the patient
community to set our commitment to engage with patients. Using the Charter as a
guideline we defined our roadmap to:
strengthen our relationships with academia, patient groups, and industry partners;
include patient and investigational site expectations into the design of late phase
clinical trials with the aim of making participation easier and more rewarding:
identify measurable performance indicators; and
assess our performance during clinical development as well as after.
We believe our research and development efforts can help advance science beyond
the patients we serve. Our plain language summaries of our data make them easily
understandable, and our commitment to our Open Access publishing enables us to
communicate clearly and effectively to all our stakeholders.
Furthermore, since 2020, we actively participate as a member
in the 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.
Actions 2022
We 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
We embedded the health literacy principles in our key documents for clinical trial
participants
We published plain language summaries in Galapagos driven scientific manuscripts
disclosing data from clinical-stage trials
78
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Our People
Our
Commitment
to our People
We are purpose driven: Our commitment to creating a
Purposeful Workplace for our Peopleto deliver
breakthrough innovation for patients
Our entrepreneurial mindset combines collaborative and continuous learning
approaches that enable our people to be empowered, get opportunities to learn and
grow, feel recognized for their contributions, and perform to the best of their abilities and
together as a team.
We value – and measure – equity, transparency, diversity, and leadership quality to foster
trust and belonging.
To monitor equity, we perform annual equity checks during our promotion and end-of-
year review processes. Additionally, we strive for a balanced pipeline of future employees
to keep a sound talent mix across all levels of the organization.
As we actively seek to grow a diverse and inclusive workplace, we aim to define a
roadmap in 2023 to deliver on our ambition to be a more a diverse, equitable and
inclusive organization by 2028, and to embed these values in everything we do, including
in our commitment to patients and strengthening our initiative aimed to ensure that our
clinical trials are designed with diversity as a key factor.
79
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Total workforce:
42%
men
1,291
58%
women
Average years employed
by the company:
men
4.39 years
women
4.41 years
% of gender in
Senior leadership:
% of gender in
Middle management:
% of gender in
Rest of employees:
57%
men
127
43%
women
43%
men
724
57%
women
35%
men
440
65%
women
Job level 10-14 : Senior leadership; Job level 7-9 : Middle management; Job level 1-6: Rest of employees
gender:
education:
539
men
752
women
20%
other
22%
PhD
21%
Bachelor
37%
Master
Average age:
43.95
Number of employees
older than 45:
629
Nationalities:
43
Average years of service:
Employee turnover:
New hires in 2022:
4.25
8.67%
179
Total number of employees includes consultants and temporary staff, and excludes data from CellPoint and
AboundBio as the data migration has not been completed yet.
80
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
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. Through a bi-yearly performance cycle, we aim to ensure an open and
supportive professional environment. Performance bonuses and, for many employees,
share-related opportunities, help drive sustainable performance and commitment, and
reward employees for their contributions to our success. As part of the performance
cycle, we also increased our investment in the development and engagement of our
employees, by focusing on learning, coaching, and training opportunities. Additionally,
we introduced “How Are You?” conversations to stimulate an open dialogue between
manager and employee as well as departmental “Talent Talks” focused on development
opportunities within and outside the different departments.
The benefits we offer vary from country to country, based on local customs and statutory
conditions. We enriched our employee benefits at both the international and country
level:
Enhanced pay for performance linkages in our Year-End compensation review and
related programs;
Broad-based annual stock-based awards to drive further alignment between the
company and all our employees;
Roll-out of further family leave policies;
Improvements to various local benefits offerings ranging from enhanced time off to
improved medical provision; and
The implementation of mobility programs to encourage environmentally sound
transportation behaviors.
Further to our Environmental, Health and Safety (EHS) policy, we provide safe and
healthy working conditions aiming to prevent any work-related personal harm. Our
Health and Safety performance data for 2022 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.
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
1
0
0
0.10
0
81
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
2022 HIGHLIGHTS
For the fourth year in a row we are included in the 2023
Bloomberg Gender-Equality Index. The Bloomberg Gender-
Equality Index is an objective measure that tracks gender
equality across five pillars: leadership & talent pipeline,
equal pay & gender pay parity, inclusive culture, anti-sexual
harassment policies, and external brand. The list
encompasses 484 companies headquartered in 45
countries and regions
We hired and onboarded 179 new colleagues, including our new CEO, bringing the
headcount to 1,338 people. Given the era of talent and the scarcity in the market
for many profiles, we increased our focus on proactive talent sourcing, created an
internship program to attract and grow young talents and launched a compelling
employer brand campaign, with the tagline #IFoundMyPurpose, that consisted of
podcasts and videos with employee testimonials
A revised strategy was set-out soon after onboarding our new CEO, redesigning the
company around our two strategic therapy areas, immunology and oncology, as core
value drivers. As part of this strategic expansion in oncology, we led the due diligence,
onboarding and integration of new colleagues at CellPoint and AboundBio, in the
Netherlands and the U.S. respectively. Another part of the transformation was the
reset towards a fit-for-purpose organization, and we announced a restructuring
potentially affecting 200 positions. We organized face-to-face sessions on three
locations to coach employees in dealing with change and insecurity. In total, over
150 employees attended these sessions and more than 85% of the participants rated
them as ‘helpful’
We celebrated the United Nations’ Health and Safety at Work Day on 28 April by
organizing a wide range of well attended, site–specific awareness and training
sessions related to first aid, the use of Automated External Defibrillators, ergonomic
workplace design, fire and explosion prevention, etc.
Belgian companies are required by law to conduct a wellbeing survey and we
launched the RAPSi20 survey at beginning of 2022 for our staff employed at our
headquarters in Mechelen. 74% of our employees participated and overall wellbeing
met or exceeded the Belgian benchmark in the vast majority (88%) of the questions
included in the survey. In addition, we conducted a separate Employee Engagement
Survey among our commercial affiliates for which we reported overall engagement
rates above Global & Industry Benchmarks. The level of employee motivation,
commitment to the company’s mission, and strong relationships between employee
and line manager stood out
20
RAPSi: Risk analysis psychosocial aspects
82
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
A new cross-functional team of “Make It Happiness” ambassadors designed and
executed a global program to promote wellbeing at work. Over 500 employees
engaged in a physical team activity and received a GLPG branded activity wear in
return. The “Make It Happiness” team also offered all employees access to the
Headspace App, resulting in 27,000+ minutes of content usage and meditation within
the first six months. Other initiatives were healthy breakfasts, inspirational keynotes
and local as well as global office games to stimulate connections
Planet
Our
Commitment
to the Planet
We are conscientious: Our Commitment to the Health of Our
Planet
The health of the planet and the health of people are interconnected.
To support our environmental ambitions, we have set the clear aspiration to become
carbon neutral by 2028. We have defined a 5-year roadmap on how to achieve this
goal, applying a sound and credible mix of carbon reduction and carbon
compensation projects. We are also embracing the circular economy, reducing waste,
and reusing or recycling materials where and when we can.
As the reduction of green-house gas emissions is an essential success factor in our
approach, our reduction roadmap entails three pathways. These include initiatives to
Systematically replace any fossil fuels by renewable energy sources used in our
buildings and car fleet;
Improve energy efficiency of our operations; and
Drive behavioral change and raising environmental awareness among our staff.
As an example, we are seeking BREEAM (Building Research Establishment Environmental
Assessment Method) and WELL (eco-friendly initiative focusing on human health and
welfare enterprise) certifications for our newly constructed buildings.
For instance, in Oegstgeest, The Netherlands, we obtained a BREEAM Excellent and a
WELL Gold certification for our new building and our garden gather native plants, trees,
shrubs, as well as beehives and insect hotels.
83
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
In our research locations in Mechelen, Romainville and Leiden, we launched Green
Teams looking for opportunities to reduce the footprint of our day-to-day operations by
promoting initiatives aimed at behavioral change.
Our approach is planned, consistent, transparent, and measurable. In 2022, we defined
the carbon footprint of our value chain. In 2023, we will disclose this footprint and
will define for long-term targets, supported by key performance metrics (such as CO2
emissions defined as Scope 121, Scope 222 and Scope 323, and relevant KPIs for waste
footprint.
management)
Furthermore, our Environmental, Health and Safety oversight group has developed an
EHS management system based on the international
ISO 14001 and ISO 45001
standards.
to consistently reduce our environmental
in our goal
Actions 2022
We engaged in quantifying the carbon footprint of Galapagos’ value chain (including
scope 1, 2 and 3 CO2 emissions), in accordance with the Green House Gas Protocol,
with the aim to disclose the data in 2023
We confirmed our ambition to become climate neutral by 2028 and have defined the
roadmap to achieve this aspiration, building on both carbon reduction and carbon
compensation initiatives
We defined expected BREEAM24 and WELL25 performance levels, to be considered
when designing new Galapagos facilities, aimed at improving our energy efficiency
performance
We defined a new mobility strategy which includes o.a. the acceleration of the
electrification of our car fleet
We launched Green Teams in our research sites. These teams of volunteers identify
opportunities to reduce Galapagos’ footprint in our day-to-day operations
21
22
23
24
25
Direct GHG (Gases that contribute to the greenhouse effect by absorbing infrared radiation) emissions resulting from sources that are
owned or controlled by an organization.
Energy indirect GHG emissions that result from the generation of purchased or acquired electricity, heating, cooling, and steam
consumed by an organization.
Other indirect GHG emissions not included in Scope 2 GHG emissions, that occur outside of the organization, including both upstream
and downstream emissions.
BREEAM is a profound sustainability assessment for masterplanning projects, infrastructure, and building. It recognizes 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.
84
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Trust & transparency
Our
Our
Commitment to
Trust & Transparency
We are transparent: Our commitment to Trust &
Transparency
Doing business ethically is about being a responsible corporate citizen. The standards
we apply and decisions that we make every day are thoughtful and considered, ensuring
that we act in the best interest of patients, people, and the planet. It is about building
trust by setting measurable goals, communicating them clearly, and being open and
transparent about the progress we are making to deliver on them – both where we are
doing well and where we need to put more effort.
We prioritize ethical management of our supply chain, vendors and partners. Just as
we seek partners and suppliers who share our commitment to the planet, we also
ensure they share our commitment to quality and ethical business practices. We refined
our third-party onboarding through an enhanced risk assessment framework and due
diligence on quality, IT security, data protection and privacy, compliance and ethics,
and environment. We also continually evaluate our supply chain to ensure continuity
and optimization of costs, and we provide a consistent framework for partners and
employees that outlines clear and comprehensive guidance for ethical and transparent
behavior across our company.
To ensure our products meet the highest quality standards, we work with qualified and
certified (GMP-licensed) distributors that ensure that all processes related to receipt,
storage, handling and final distribution to customers comply with the regulations. We
regularly audit our GxP manufacturers and distributors.
We work to protect our people, patients, our planet, and our business by taking every
reasonable measure to ensure that we all operate in accordance with the applicable
regulations and standards as well as compliance laws.
We nurture a culture of voice that encourages every one of our employees to share ideas
and that ensures that our employees feel protected if they believe something needs to
be corrected.
We also nurture a culture of integrity, in which our employees, partners and suppliers
value and take accountability for upholding our standards.
85
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
We operate in an environment where the safety of patients is paramount. We currently
have one medicine, Jyseleca®, on the market in Europe and Japan. We have
implemented a pharmacovigilance system designed to monitor the safety of Jyseleca®
and to detect any change to the benefit/risk profile.
To protect our patients, our partners, employees, and other stakeholders, we
implemented state of the art security monitoring systems, data and cyber security and
governance frameworks.
We explicitly forbid animal neglect or cruelty. We have also implemented practices that
demonstrate our commitment and responsibility to refine, reduce and replace testing
involving the use of animals to the greatest possible extent, and we will continue to
research, promote, and further implement alternative methods. From a scientific
perspective, it is not yet possible to examine all the complex interactions a potential
treatment triggers in a living organism without animal testing. Additionally, there is
the legal framework for medicine development with regulatory authorities worldwide
requiring new medicines be evaluated in animals to ensure the quality, safety, and
efficacy of these products before granting approval. However, we are committed to
continue to implement 3R (Replacement, Reduction, and Refinement) principles. Our
Animal Welfare Committee supported more than 15 major 3R initiatives in 2022,
including six new initiatives. Our Animal Welfare Policy was endorsed by senior
management and is requested from all our Research and Development suppliers.
Assessment of animal welfare was also reinforced through several key actions, including
laboratories,
requirement of animal standards for
verification of the implementation of these practices, detailed review and update of the
quality management system regarding animal welfare, establishment of a surveillance
process of the animal welfare incidents and their resolution.
internal and external animal
Actions 2022
We launched our Speak up, Listen Up program in 2022 and will continue the roll out
in 2023
We launched an anti-harassment and anti-discrimination policy and will implement
the policy in 2023
97.1% of our employees completed the training on our Code of Conduct
Since the end of 2022 the Third Party Risk Assessment (TPRA) process for onboarding
new vendors is mandatory, and going foward we aim to use the TPRA as a KPI to
measure compliance and ethics in our supply chain
86
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
Reporting on EU Taxonomy
EU Taxonomy 2022 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 company with more than 500 employees, Galapagos is in scope of the EU
Taxonomy Regulation26. For reporting over the fiscal year 2022, Galapagos has to disclose
the proportion of its 2022 turnover, capital expenditures (‘CapEx’), and operating
expenses (‘OpEx’) eligible and aligned under the EU Taxonomy on sustainable activities.
The EU Taxonomy 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:
(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;
(i) climate change mitigation;
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; the determination of eligibility happens on the basis of the
description of activities. An eligible activity becomes Taxonomy-aligned when it meets
all the aforementioned overarching criteria, which includes that such activity should
substantially contribute to at least one of the six environmental objectives. However,
only activities that contribute to the two first environmental objectives (climate change
mitigation (“CCM”) and climate change adaptation (“CCA”)) have been formally adopted
so far.
Following thorough analysis of the EU Taxonomy legal framework27, we do not consider
our core business activities, being discovering, developing and commercializing
innovative medicines, to be in scope of the Climate Delegated Act. Our core economic
activities qualify as EU Taxonomy non-eligible economic activities, and do not
substantially contribute neither to CCM nor to CCA, and are therefore are not EU
Taxonomy-aligned.
26
27
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.
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.
87
Galapagos NV Annual Report 2022
SUSTAINABILITY REPORT
For the determination of turnover, CapEx and OpEx during this analysis, we use the
reported data in the 2022 consolidated financial statements included in this report:
Turnover covers all business activities of Galapagos at 31 December 2022 and the
denominator can be reconciled with the 2022 IFRS total net revenues recognized
pursuant to €505.3 million and disclosed in note 6, being the revenues from
commercial sales and collaboration activities.
CapEx consists of additions to tangible and intangible assets during the financial
year 2022 considered before depreciation, amortization and any re-measurements
recognized by Galapagos pursuant to IAS 38. The denominator (total CapEx) can
be reconciled with the sum of the lines ‘Impact of acquisitions of businesses’ and
‘Additions’ disclosed in notes 13 and 14 (total €170.0 million) of the consolidated
financial statements. The majority of CapEx is associated with licences, rights,
technology and in-process R&D acquired through a business combination, and
building costs of new office spaces in Belgium and the Netherlands.
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. These costs are for the majority associated with our R&D
expenditure, as disclosed in note 7 (total €515.1 million).
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 as a result
each are 100% Taxonomy not eligible, therefore not EU Taxonomy-aligned.
Please refer to the Annexes to this Annual Report for the disclosure on KPIs of non-
financial undertakings as required by Annexes II of the Climate Delegated Act.
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.
88
Galapagos NV Annual Report 2022
Corporate
governance
Our governance in 2022
Forward with Purpose
CORPORATE GOVERNANCE
Galapagos’ corporate governance policies
As a listed company with its registered office in Mechelen (Belgium), Galapagos NV
(hereinafter "Galapagos NV" or the "Company") 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 of which entered into force on 1
January 2020.
For the reporting year beginning on 1 January 2022, the 2020 Code was our reference
code. On 26 April 2022, as a consequence of the introduction of a one-tier governance
structure at the Company through the amendment of our Articles of Association,
Galapagos NV’s Board of Directors approved an updated Corporate Governance Charter.
On 21 March 2023, our Board of Directors approved an amendment to the Corporate
Governance Charter. The amended Corporate Governance Charter refers to the
establishment of the Management Committee supporting the Executive Committee,
allows the same person to be Lead Non-Executive Director and Chairman of the Audit
Committee, provides that the Lead Non-Executive Director is member or Chairman of
the Nomination Committee and clarifies that the Lead Non-Executive Director supports
the Chairman in ensuring the prevention and managing of conflicts of interests involving
potentially a director. Galapagos NV’s Corporate Governance Charter is available on
our website (www.glpg.com). The Corporate Governance Charter applies in addition
to the applicable laws and regulations, Galapagos NV’s Articles of Association and the
corporate governance provisions included in the Belgian Companies Code and the 2020
Code. The Corporate Governance Charter describes the main aspects of corporate
including its governance structure, the terms and
governance at Galapagos NV,
functioning of the Board of Directors (including its Board Committees), the Executive
Committee and the rules of conduct.
For the reporting year beginning on 1 January 2022, the Board of Directors strove to
comply with the rules and recommendations of the 2020 Code. At the same time, the
Board of Directors is of the opinion that certain deviations from the rules and
recommendations of the 2020 Code were justified, in view of our activities, our size, and
the specific circumstances in which we operate. In such cases, which are mentioned in
this corporate governance statement, we apply the “comply or explain” principle as set
forth in the 2020 Code. Reference is made to the About the Board of Directors and
Nomination Committee sections below.
90
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
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.
From 1 January 2022 until 26 April 2022, Galapagos NV had a two-tier governance
structure as provided by the Belgian Companies Code, with two governance bodies: the
Supervisory Board and the Management Board. The Supervisory Board was responsible
for the general policy and strategy of the Company, and had all powers which are
specifically reserved for it under the Belgian Companies Code. The Supervisory Board
also supervised the Management Board. The Management Board exercised all powers
which are not reserved for the Supervisory Board in accordance with the Belgian
Companies Code,
including the management of the Galapagos group and the
supervision of actual performances compared to strategic goals, plans and budgets.
As from 26 April 2022, Galapagos NV adopted a one-tier governance structure as
provided by the Belgian Companies Code, with the Board of Directors replacing the
(former) Supervisory Board and the Executive Committee replacing the (former)
Management Board.
One-tier governance structure
Board of Directors
executive and non-executive directors
Delegation of powers
Executive Committee (chaired by CEO)
executive management and running of the Company
Board of Directors
Executive Committee
Responsible for general policy and strategy
Management of the Galapagos group
Supervision of Executive Committee
Day-to-day management by CEO
Approval of the annual budget
Reporting to the Board of Directors on the
Powers reserved to Board of Directors pursuant to
implementation of strategic guidelines, etc.
Belgian Companies Code
Research, identification and development of
strategic possibilities and proposals
91
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
The role of the Board of Directors is to pursue sustainable value creation by the
Company, by setting the Company’s strategy, putting in place effective, responsible and
ethical leadership and monitoring the Company’s performance. The Board of Directors is
the ultimate decision-making body, with the overall responsibility for the management
and control of the Company, and is authorized to carry out all actions that are necessary
or useful for the realization of the Company’s object with the exception of those reserved
to the Shareholders’ Meeting by applicable law. The Board of Directors also supervises
the Executive Committee. The Board acts as a collegiate body.
The Board of Directors has delegated certain powers to manage the Company to the
Executive Committee, led by our Chief Executive Officer. The Executive Committee is
responsible and accountable to the Board of Directors for the discharge of
its
responsibilities. Furthermore, the Board of Directors has delegated the day-to-day
management of the Company to one Executive Committee member, i.e. our Chief
Executive Officer.
In order to efficiently fulfill its tasks and in view of the size and activities of the Company,
the Board of Directors has established an Audit Committee, a Remuneration Committee
and a Nomination Committee. These Board Committees serve in an advisory capacity
to the Board of Directors on the matters delegated to them respectively as set forth in
the applicable laws and the Company’s Corporate Governance Charter. Until 2 May 2022,
there was a combined Nomination and Remuneration Committee. As from 2 May 2022,
our Board of Directors has set up a separate Nomination Committee and Remuneration
Committee.
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 deemed incorporated by simple reference into this corporate
governance statement.
92
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Board of Directors of Galapagos NV
Composition of the Board of Directors
Per 31 December 2022, our Board of Directors consists of the following members:
Paul Stoffels*
joined Galapagos as Chief Executive
Officer in April 2022, and is an
executive member and the
Chairman of our Board of Directors
since 26 April 2022. He also is
member of the Executive
Committee at Galapagos. Prior to
that, he was Vice Chairman of the
Executive Committee and Chief
Scientific Officer of Johnson &
Johnson where he set the
company's wide innovation agenda
and led its pharmaceutical R&D-
pipeline, as well as other external
initiatives. Before that, he was worldwide Chairman of
Pharmaceuticals of Johnson & Johnson which, under his
leadership, significantly rejuvenated its product pipeline and
adopted a transformational R&D-operating model, which resulted
in the launch of 25 innovative medicines across the globe. Dr.
Stoffels joined Johnson & Johnson in 2002, following the
acquisition of Virco and Tibotec, where he was Chief Executive
Officer and Chairman respectively, and where he led the
development of several breakthrough products for the treatment of
HIV. Dr. Stoffels also is a member of the Supervisory Board of Philips
Healthcare in the Netherlands.
*StoffelsIMC BV, permanently represented by Dr. Paul Stoffels
93
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Rajesh Parekh
is a non-executive member of our
Board of Directors since 2004, and
has served as the Chairman of our
Board from 2004 to 26 April 2022.
Dr. Parekh is a General Partner at
Advent Life Sciences which he
joined in 2006. During his academic
career at Oxford University, he co-
founded Oxford GlycoSciences
where he served as Chief Scientific
Officer and Chief Executive Officer
from 1988 until its sale to Celltech
Group (now UCB) in 2003. He has
founded or served on the Boards of
several life sciences companies in the United States and Europe,
including Avila Therapeutics, EUSA Pharma, Biocartis, and
Amsterdam Molecular Therapeutics (AMT) Holding (now uniQure).
He also was a member of the Supervisory Board of the Novartis
Venture Fund. Dr. Parekh also serves as a member of the Board of
Directors of Advent Life Sciences, Aleta, Arrakis, Artax, Aura
Biosciences, Levicept, Ventus, PE Limited, Pheno Therapeutics, and
Ploughshare. He received his MA in Biochemistry, and DPhil in
Molecular Medicine from the University of Oxford, where he has
also served as a Senior Research Fellow and Professor.
94
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Mary Kerr
is a non-executive independent
member of our Board of Directors
since 26 July 2016, as well as Chief
Executive Officer and director of
NeRRe Therapeutics. Dr. Kerr was
co-founder and Chief Executive
Officer of KaNDy Therapeutics until
that company was acquired by
Bayer in September 2020 for $425
million, potential development and
regulatory milestone payments of
up to $450 million, and by potential
additional triple digit million in
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. She 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.
95
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Peter Guenter
is a non-executive independent
member of our Board of Directors
since 30 April 2019. Mr. Guenter is a
member of the Executive Board of
Merck and Chief Executive Officer of
Merck Healthcare since January
2021. Before joining Merck, he
served as Chief Executive Officer at
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 until
August 2017. Before joining Sanofi, he held different positions in
sales and marketing at Smith Kline and Ciba Geigy. Mr. Guenter also
is a member of the Board of the European Federation of
Pharmaceutical Industries and Associations (EFPIA). He holds a
Master’s Degree in Physical Education from the Faculty of Medicine
and Health Sciences, University of Ghent.
96
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Daniel O’Day
is a non-executive member of our
Board of Directors since 22 October
2019. Mr. O’Day is the Chairman of
the Board of Directors and Chief
Executive Officer of Gilead Sciences,
which employs more than 17,000
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 Roche’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 also serves on
the Board of Directors for the Pharmaceutical Research and
Manufacturers of America Organization. Mr. O’Day holds a
Bachelor’s Degree in Biology from Georgetown University and a
MBA from Columbia University in New York.
97
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Linda Higgins
is a non-executive member of our
Board of Directors since 22 October
2019. Linda Slanec Higgins, PhD,
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 the Biology division,
significantly expanding the
therapeutic area scope and
capabilities of the department. She
founded External Innovation as
integral component for Research.
She previously served as President
& Chief Executive Officer of InteKrin Therapeutics, and as Head of
Research at Scios, 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 central nervous system, fibrosis, inflammation,
cardiovascular, virology and oncology. Dr. Higgins built many of
these as new areas at Scios and Gilead. Dr. Higgins 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 Post-Doctoral training in Molecular
Genetics at the Howard Hughes Medical Institute of the University
of California, Berkeley. She has authored over 50 original peer
reviewed scientific papers and invited articles, and is an inventor of
over a dozen patents. Dr. Higgins also serves as a non-executive
director on the Board of Arcus Biosciences and Tizona
Therapeutics.
98
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Elisabeth Svanberg
is a non-executive independent
member of our Board of Directors
since 28 April 2020. Dr. 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 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 where she was
managing a portfolio of 90 products, used by an estimated 150
million patients globally. Since 2016, Dr. Svanberg currently serves
as Chief Development Officer at Ixaltis, 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 also serves as a non-executive director on the Boards of
Egetis (formerly PledPharma) (since 2017), Swedish Orphan
Biovitrum (until May 2022), Pharnext (until March 2022), Amolyt
Pharma (since 2021), LEO Pharma (since 2022), and EPICS
Therapeutics (since 2022).
99
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Jérôme Contamine
is a non-executive independent
member of our Board of Directors
since 26 April 2022. Mr. Contamine
served as Chief Financial Officer of
Sanofi for more than nine years
from 2009 until 2018. Prior to
joining Sanofi, he was Chief
Financial Officer of Veolia from 2000
to 2009. He previously held various
operating functions at Total, and
served four years as an auditor at
the Cour des Comptes (the supreme
body responsible for auditing the
use of public funds in France). Mr.
Contamine is a graduate of France’s École Polytechnique, ENSAE
(École Nationale de la Statistique et de l’Administration
Économique) and École Nationale d’Administration. He held the
position of non-executive director at Valeo from 2006 to 2017. Mr.
Contamine also serves as a non-executive director on the Boards of
Société Générale and Total Energies.
100
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Dan Baker
is a non-executive independent
member of our Board of Directors
since 26 April 2022. Dr. Baker joined
Janssen/Centocor in 2000 and as
Vice President Immunology R&D his
responsibilities included the clinical
development of Remicade, Simponi
and Stelara, as well as other
programs in rheumatology and
dermatology. He supervised many
Phase I-III trials in multiple disease
areas, and oversaw more than 15
regulatory approvals in the US,
Europe and Japan. Throughout his
time at Janssen, he was responsible for evaluating business
development opportunities in the immunology space. In 2015 he
took on a new role as Disease Area Stronghold Leader at Janssen
where he was responsible for Phase II & III clinical development
plans for rheumatology products and the overall portfolio strategy
in rheumatology and immunology. This included the early research
strategy for immunology discovery, managing the early portfolio
development and approving all late-stage efforts. Since his
retirement from Janssen in 2019, he has continued to be involved in
bringing therapies to patients. He raised capital (>$20MM) to fund
and start an immunology company, KiRA Biotech, where he now
acts as Chief Executive Officer and as Executive Director. Dr. Baker
received his B.A. in Biology from Gettysburg College and his Medical
Degree from the University of Pennsylvania. He completed his
Medical Residency at Hershey Medical Center and Fellowship in
Rheumatology and Immunology at the University of Pennsylvania,
followed by a Research Fellowship in Rheumatology at Mass
General Hospital. He continued on as part of the faculty of the
University of Pennsylvania for 18 years before taking on industry
roles.
101
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Changes to our Board of Directors
The tenure of Katrine Bosley and Howard Rowe as members of our Board of Directors
came to an end on 26 April 2022. We thank Katrine Bosley and Howard Rowe for their
contributions and commitment to the Company over the years.
About the Board of Directors
Galapagos NV’s Board of Directors consists of at least five and no more than nine
members. At least three members of our Board of Directors are independent. On 31
December 2022, the Board of Directors consisted of nine members, five of whom are
independent within the meaning of article 7:87 of the Belgian Companies Code and
provision 3.5 of the 2020 Code.
Except for Stoffels IMC BV (permanently represented by Dr. Paul Stoffels), all members of
the Board of Directors are non-executive directors.
The members of our Board of Directors are appointed at the Shareholders’ Meeting
upon the proposal of the Board of Directors, for a renewable term of up to four years.
Members of the Board of Directors whose mandate has come to an end may be re-
appointed. When a position on the Board of Directors becomes vacant, the remaining
members may temporarily fill the mandate by cooptation and until appointment of a
new Board member at the next Shareholders’ Meeting. Each member of the Board of
Directors appointed as such by the Shareholders’ Meeting shall complete the tenure of
the member of the Board of Directors he/she replaces, unless the Shareholders’ Meeting
decides otherwise. The Nomination Committee nominates, for approval by the Board
of Directors, candidates to fill vacancies as they arise, and advises on proposals for
in each case taking into account the
appointment originating from shareholders,
Company's needs and the selection criteria determined by the Board of Directors. In
proposing candidates, particular consideration will be given to gender diversity and
diversity in general, as well as complementary skills, knowledge and experience.
Provision 3.12 of the 2020 Code recommends that, in case of a one-tier governance
structure, (a) there should be a clear division of responsibilities between the person
presiding over the Board of Directors (the Chairman) and the person assuming executive
responsibility for running the company’s business (the CEO), and (b) the Chairman of
the Board of Directors and CEO should not be the same individual. In deviation from
this provision, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels), who is our
CEO since 1 April 2022, was also appointed as Chairman of the Board of Directors as of
26 April 2022. In light of the prevailing circumstances, the Board of Directors considered
that the one-tier governance structure and the combined role as CEO/Chairman allows
the Company to fully leverage the leadership of Dr. Paul Stoffels, and to efficiently set
and implement the Company's direction and strategy (including in the field of business
development). Furthermore, the Board of Directors is of the opinion that such combined
role has a positive impact on the functioning and efficiency of the Board, as well as on
the provision of information to the Board of Directors, allowing the Board of Directors
to monitor the Company’s (and group’s) performance more effectively during 2022. In
order to ensure sufficient balance, the Board adopted a counter balancing governance
102
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
structure that includes the election of a Lead Non-Executive Director acting as the
principal liaison between the Chairman and the non-executive members of the Board of
Directors (see also below). Dr. Rajesh Parekh was appointed as the Lead Non-Executive
Director of the Company, effective as of 2 May 2022. Effective as of March 21, 2023,
Jérôme Contamine is appointed as the new Lead Non-Executive Director of Galapagos,
replacing Dr. Rajesh Parekh. The Lead Non-Executive Director is entrusted with the
responsibilities and powers set out in the Corporate Governance Charter of Galapagos
NV.
The following table sets forth certain information with respect to the members of our
Board of Directors during the financial year ended on 31 December 2022:
Name
Rajesh Parekh(2)
Stoffels IMC BV(3) (6)
Howard Rowe(4)
Katrine Bosley(4)
Mary Kerr
Peter Guenter
Elisabeth Svanberg
Jérôme Contamine(5)
Dan Baker(5)
Daniel O’ Day
Linda Higgins
Position
Nationality
Chairman
British
Chairman
Belgian
Member
British and
U.S.
Member
U.S.
Member
British
Member
Belgian
Member
Swedish
Member
French
Member
Member
Member
U.S.
U.S.
U.S.
Year of birth
or
incorporation
Year of initial
appointment
Independent
director(1)
Attendance
rate
1960
2022
1969
1968
1961
1962
1961
1957
1950
1964
1962
2004
2022
2010
2013
2016
2019
2020
2022
2022
2019
2019
●
●
●
●
●
●
●
91%
100%
100%
100%
91%
91%
100%
100%
100%
100%
100%
(1) Independent director pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code.
(2) Chairman until 26 April 2022
(3) Director and Chairman as from 26 April 2022 – permanently represented by Dr. Paul Stoffels
(4) Director until 26 April 2022
(5) Director as from 26 April 2022
(6) In June 2022, Galapagos entered into a related party transaction with Stoffels IMC BV within the meaning of article 7:96 of the Belgian
Companies Code (i.e. an amendment of the mangement agreement between Galapagos NV and Stoffels IMC BV). Having a conflict of
interests concerning the proposed amendment, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) left the meeting before the
deliberation and vote concerning this agenda item took place. Afterwards, he rejoined the Board meeting for the next agenda items. Thus,
this meeting was taken into account for his attendance rate during the 2022 financial year.
In 2022, the following persons, as identified in the table above, were members of the
Board of Directors (former Supervisory Board): Stoffels IMC BV (permanently represented
by Dr. Paul Stoffels) (member and Chairman since 26 April 2022), Rajesh Parekh
(Chairman until 26 April 2022), Howard Rowe (member until 26 April 2022), Katrine
Bosley (member until 26 April 2022), Mary Kerr, Peter Guenter, Daniel O’Day, Linda
Higgins, Elisabeth Svanberg, Jérôme Contamine (member since 26 April 2022) and Dan
Baker (member since 26 April 2022). On 31 December 2022, Mary Kerr, Peter Guenter,
Elisabeth Svanberg, Jérôme Contamine and Dan Baker were independent members
of the Board of Directors within the meaning of article 7:87 of the Belgian Companies
Code and provision 3.5 of the 2020 Code. In 2022, the Board of Directors was therefore
composed of a majority of independent directors.
103
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
At the Annual Shareholders’ Meeting of 26 April 2022, the tenure of Howard Rowe and
Katrine Bosley as members of the Board of Directors came to an end.
In 2022, the Board of Directors thus consisted of three women (except between
1 January 2022 and 26 April 2022 when the Board consisted of four women), and six
men (except between 1 January 2022 and 26 April 2022 when the Board consisted of four
men), representing five different nationalities and different age categories.
During 2022, Galapagos NV complied with its obligations with respect to gender
diversification in the Board of Directors as set forth in article 7:86 of the Belgian
Companies Code, and the Board of Directors 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 members of the Board of Directors are
included in this report (see above), and are also available on www.glpg.com.
6
men
Gender:
9
members
3
women
5
independent
Status:
9
members
4
non-
independent
The role of the Board of Directors is to pursue the long-term success and sustainable
value creation by Galapagos NV. The Board of Directors does so by assuming the
authority and responsibilities assigned to it by Belgian corporate law, the Company’s
Articles of Association, and the Corporate Governance Charter, and by combining
entrepreneurial leadership with appropriate risk assessment and management. Each of
the directors’ expertise and experience is exemplified by the varied professional activities
they carry out and offices they hold. During its meetings in 2022, the Board of Directors
dealt with matters pertaining to, among other things, our strategy and growth, the entry
into the field of oncology through the combined acquisitions of CellPoint and
AboundBio, the evaluation of other business development opportunities, the search
and recruitment of our new Chief Executive Officer, the implementation of our new
governance model, the implementation of our new strategic direction to accelerate
innovation and time-to-patients (including a focus on key therapeutic areas of
immunology and oncology, and an expansion of drug modalities beyond small
molecules, such as biologicals and CAR-T), clinical trial results, commercialization of
Jyseleca®, and regulatory developments, convening of the Shareholders’ Meeting and
preparation of resolutions to be submitted for approval to the shareholders, the creation
of new subscription rights for the benefit of the personnel of Galapagos NV and its
subsidiaries, and review and approval of our financial reporting.
104
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
In 2022, fourteen meetings took place physically, through written resolutions, telephone
conferences or videocalls to discuss specific matters, including three meetings in the
presence of a notary public (relating to the issuance of Subscription Right Plan 2022
(A), Subscription Right Plan 2022 (B), Subscription Right Plan 2022 BE, Subscription
Right Plan 2022 RMV and Subscription Right Plan 2022 ROW). Two of the meetings in
the presence of a notary public were attended by Peter Guenter and Rajesh Parekh via
telephone conference. The third meeting in the presence of a notary public was attended
by Mary Kerr and Elisabeth Svanberg via telephone conference. All other directors were
represented by proxy at the meetings in the presence of a notary public. The attendance
rate for the other Board meetings, as identified in the table above, was as follows: Rajesh
Parekh: 91%; Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) (member
since 26 April 2022): 100%; Howard Rowe (member until 26 April 2022): 100%; Katrine
Bosley (member until 26 April 2022): 100%; Mary Kerr: 91%; Peter Guenter: 91%; Jérôme
Contamine (member since 26 April 2022): 100%; Dan Baker (member since 26 April
2022): 100%; Daniel O’Day: 100%; Linda Higgins: 100%, and Elisabeth Svanberg: 100%.
The overall attendance rate was 98%. Stoffels IMC BV (permanently represented by Dr.
Paul Stoffels) recused itself from deliberation and decision-making on one agenda item
because of a conflict of interests,
in accordance with article 7:96 of the Belgian
Companies Code, as set forth in further detail in the section titled Conflict of interests
and related parties.
The Board of Directors acts as a collegial body. A formal evaluation of the Board of
Directors (formerly Supervisory Board) and its Board Committees was carried out in
September 2021. Each member of the Board of Directors provided feedback through
individual assessment forms. The results were presented on an aggregate basis by the
Secretary adinterimof the (former) Supervisory Board (currently Board of Directors), and
served as a basis for discussion by the full (former) Supervisory Board. This evaluation
specifically addressed the functioning of the (former) Supervisory Board, the size and
composition of the (former) Supervisory Board, the interaction between the (former)
Supervisory Board and the (former) Management Board (currently the Executive
Committee), and the functioning of the Board Committees. A new Board evaluation
exercise was performed in the second half of 2022. As part of this exercise, the Board of
Directors' composition was reviewed, a composition matrix was created, and interviews
were held with Board members on the functioning and composition of the Board of
Directors.
Pursuant to the Company’s Corporate Governance Charter and as a counter balancing
governance structure for the combined CEO & Chairman role within the Board, the
Board of Directors appointed a Lead Non-Executive Director. The Lead Non-Executive
Director is also automatically the Vice-Chairman of the Board of Directors. The Lead Non-
Executive Director is entrusted with the responsibilities and powers set out in Galapagos
NV’s Corporate Governance Charter, including, but not limited to, serving as principal
liaison between the non-executive directors and the Chairman of the Board. Dr. Rajesh
Parekh was appointed as the Lead Non-Executive Director of the Company, effective as
of 2 May 2022. Effective as of March 21, 2023, Jérôme Contamine is appointed as the new
Lead Non-Executive Director of Galapagos, replacing Dr. Rajesh Parekh.
105
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
The Board of Directors appointed a Secretary entrusted with the functions set out in
Galapagos NV’s Corporate Governance Charter, including, but not limited to, to advise
the Board of Directors and its individual members on all corporate governance matters.
Committees
Audit Committee
Audit Committee member
Howard Rowe(2)
Jérôme Contamine(3)
Mary Kerr
Peter Guenter
Function
Chairman
Chairman
Member
Member
Independent
member(1)
Attendance rate
●
●
●
●
100%
100%
89%
100%
(1) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code
(2) Chairman until 26 April 2022
(3) Chairman as per 2 May 2022
The Audit Committee assists the Board of Directors in fulfilling its monitoring
responsibilities with respect to financial reporting, and control and risk management in
the broadest sense. The Audit Committee’s key responsibilities include (i) monitoring
the integrity of the Company’s financial statements and the Company’s accounting and
financial reporting processes and financial statement audits,
(ii) monitoring the
effectiveness of the Company’s internal control and risk management systems, (iii)
(iv) monitoring the
monitoring the internal audit function and its effectiveness,
performance of the external auditor and the statutory audit of the annual and
consolidated accounts, (v) reviewing and monitoring the independence of the external
auditor, (vi) informing the Board of Directors on the results of the statutory audit, and
(vii) informing the Board of Directors on the Company’s ESG activities, as included in the
Sustainability report which contains the non-financial information as required by articles
3:6, § 4 and 3:32, § 2 of the Belgian Companies Code.
Per 31 December 2022, the Audit Committee consisted of the following three directors,
as identified in the table above: Jérôme Contamine (Chairman), Mary Kerr, and Peter
Guenter. All members of the Audit Committee are non-executive directors, and are all
independent within the meaning of article 7:87 of the Belgian Companies Code,
provision 3.5 of the 2020 Code, and Rule 10A-3(b)(1) under the U.S. Securities Exchange
Act of 1934, as amended (subject to the exemptions provided in Rule 10A-3(c) under such
act. The Chairman of the Audit Committee is an independent non-executive director.
Collectively, the members of the Audit Committee have sufficient relevant experience
to fulfill their roles effectively, notably in financial matters (including, but not limited to,
general accounting and financial reporting, as well as matters of audit, internal control,
and risk control) and in the life sciences industry.
106
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
in which it dealt with matters
In 2022, the Audit Committee held nine meetings,
pertaining to, among other things, audit review, risk management, monitoring financial
reporting, the monitoring of Sarbanes-Oxley compliant internal and external audit
systems, the monitoring of compliance matters, an update of the Audit Committee
Complaints Procedure Policy, a cyber security incident and the onboarding of the new
auditor. The Audit Committee acts as a collegial body. The overall attendance at the
Audit Committee meetings in 2022 was 97%. The attendance rate at the Audit Committee
meetings in 2022 for each of its members is set forth in the table above. Some of the
meetings were attended by the statutory auditor of the Company.
Nomination Committee
Nomination Committee members(1)
Rajesh Parekh
Katrine Bosley(3)
Stoffels IMC BV(4)
Jérôme Contamine(5)
Elisabeth Svanberg(6)
Function
Chairman
Member
Member
Member
Member
Independent
member(2)
Attendance rate
●
●
●
100%
100%
100%
100%
100%
(1) Pursuant to article 4.20 of the 2020 Code, the remuneration committee and nomination committee were combined from 1 January 2022 up
to 2 May 2022
(2) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code
(3) Member until 26 April 2022
(4) Member as per 2 May 2022 and permanently represented by Dr. Paul Stoffels
(5) Member as per 2 May 2022
(6) Member until 2 May 2022
The Nomination Committee makes recommendations to the Board of Directors with
regard to the appointment of the members of the Board of Directors, the CEO, and
the members of the Executive Committee. Per 31 December 2022, the Nomination
Committee consisted of the following three directors, as identified in the table above: Dr.
Rajesh Parekh (Chairman), Stoffels IMC BV (permanently represented by Dr. Paul Stoffels)
and Jérôme Contamine. Collectively, the Nomination Committee members have
sufficient relevant experience to fulfill their roles effectively.
Provision 4.19 of the 2020 Code recommends that the Board of Directors should set
up a Nomination Committee with the majority of its members comprising independent
non-executive directors. In deviation from this provision, the Nomination Committee
consisted in 2022 of one executive director, one independent non-executive director
and one non-executive director. The latter (Dr. Rajesh Parekh) no longer qualifies as
independent pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of
the 2020 Code given his long tenure at Galapagos NV. The Board felt it was appropriate
to appoint him as a member and Chairman of the Nomination Committee in view of his
experience as former Chairman of the Board and to ensure a smooth transition to the
new Chairman. Effective as of 21 March 2023, Dr. Elisabeth Svanberg was appointed as
member and Chairman of the Nomination Committee, replacing Dr. Rajesh Parekh.
107
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
The Nomination Committee meets as frequently as necessary to ensure effective
operation of its responsibilities. In 2022, the Nomination Committee held six meetings,
dealing with, among other things, matters pertaining to the hire of our new CEO, the
proposal of new directors appointed at our Shareholders’ Meeting on 26 April 2022, our
new governance structure, the proposal of our new Executive Committee members (as
per 1 January 2023), and our 2022 Board evaluation. The Nomination Committee acts as
a collegial body. The overall attendance at the Nomination Committee meetings in 2022
was 100%. The attendance rate at the Nomination Committee meetings in 2022 for each
of its members is set forth in the table above.
Remuneration Committee
Remuneration Committee members(1)
Rajesh Parekh
Katrine Bosley(3)
Jérôme Contamine(4)
Elisabeth Svanberg
Function
Chairman
Member
Member
Member
Independent
member(2)
Attendance rate
●
●
●
100%
100%
100%
100%
(1) Pursuant to article 4.20 of the 2020 Code, the remuneration committee and nomination committee were combined from 1 January 2022 up
to 2 May 2022
(2) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code
(3) Member until 26 April 2022
(4) Member as per 2 May 2022
The Remuneration Committee makes recommendations to the Board of Directors with
regard to the remuneration of the members of the Board of Directors, the CEO, and the
members of the Executive Committee, including variable remuneration and long-term
incentives, whether or not stock-related, in each case insofar as allowed by applicable
laws and regulations.
Per 31 December 2022, the Remuneration Committee consisted of the following three
non-executive directors, as identified in the table above: Dr. Rajesh Parekh (Chairman),
Elisabeth Svanberg, and Jérôme Contamine, the majority of whom are independent
members of the Board of Directors within the meaning of article 7:87 of the Belgian
Companies Code and provision 3.5 of the 2020 Code. Collectively, the Remuneration
Committee members have sufficient relevant experience to fulfill their roles effectively.
The Remuneration Committee meets as frequently as necessary to ensure effective
operation of its responsibilities. In 2022, the Remuneration Committee held six meetings,
dealing with, among other things, matters pertaining to the remuneration of our new
CEO and Executive Committee members, grants of subscriptions rights, restricted stock
units (RSUs) and bonuses, the packages of our retiring Chief Business Officer and Chief
Medical Officer, and salary increases. The Remuneration Committee acts as a collegial
body. The overall attendance at the Remuneration Committee meetings in 2022 was
100%. The attendance rate at the Remuneration Committee meetings in 2022 for each
of its members is set forth in the table above. The CEO participated in those meetings
where the remuneration of the Executive Committee members (other than the CEO) were
discussed.
108
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Executive Committee of Galapagos NV
Composition of the Executive Committee
Per 31 December 2022, our Executive Committee consists of the following members:
Paul Stoffels*
joined Galapagos as Chief Executive
Officer in April 2022, and is an
executive member and the
Chairman of our Board of Directors
since 26 April 2022. He also is a
member of the Executive
Committee at Galapagos. Prior to
that, he was Vice Chairman of the
Executive Committee and Chief
Scientific Officer of Johnson &
Johnson where he set the
company's wide innovation agenda
and led its pharmaceutical R&D-
pipeline, as well as other external
initiatives. Before that, he was worldwide Chairman of
Pharmaceuticals of Johnson & Johnson which, under his
leadership, significantly rejuvenated its product pipeline and
adopted a transformational R&D-operating model, which resulted
in the launch of 25 innovative medicines across the globe. Dr.
Stoffels joined Johnson & Johnson in 2002, following the
acquisition of Virco and Tibotec, where he was Chief Executive
Officer and Chairman respectively, and where he led the
development of several breakthrough products for the treatment of
HIV. Dr. Stoffels also is a member of the Supervisory Board of Philips
Healthcare in the Netherlands
*Stoffels IMC BV, permanently represented by Dr. Paul Stoffels
109
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Bart Filius
is appointed as President of
Galapagos in February 2021, and
serves as Chief Financial Officer
since December 2014 and as Chief
Operating Officer since September
2017, and is a member of the
Executive Committee at Galapagos.
Prior to that, Mr. Filius worked over
13 years at Sanofi where he was the
Chief Financial Officer of Sanofi
Europe during the last 3 years.
Earlier at Sanofi, he was the
Country Manager and Chief
Financial Officer of Sanofi in the
Netherlands. Before that, he was Vice President of 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.
110
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Walid Abi-Saab
joined Galapagos as Chief Medical
Officer in March 2017. Dr. Abi-Saab
has driven Galapagos’ overall
medical strategy and was
responsible for late stage clinical
development and operations,
medical and regulatory affairs and
safety. As of June 2021, he became
responsible for all development
activities as he added early-stage
development activities to his
already existing responsibilities for
late-stage development.
111
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Michele Manto
is appointed as Chief Commercial
Officer in January 2020, and
member of the Executive
Committee at Galapagos. 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 General
Manager in the Netherlands. Prior to this, he led AbbVie’s
commercial activities and launches in 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.
112
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Our new Executive Committee Members
Per 1 January 2023, our Executive Committee has been strengthened with the addition
of the following members:
Annelies Missotten
is appointed as Chief Human
Resources Officer and member of
the Executive Committee at
Galapagos. She joined Galapagos as
Vice President Human Resources in
February 2018 to transform and
build an expert HR team to enable
business growth, and leading the
transformation of Galapagos into an
integrated biopharmaceutical
company with an international set-
up. In 2020, she was appointed
Senior Vice President Human
Resources and strategic advisor to
the CEO and Executive Committee. Before joining Galapagos, she
held various senior global HR positions at GSK. She started her
career at Proximus, and acquired deep expertise over time in key
HR Centres of Expertise, including Training & Development, Talent
Acquisition and Reward, and HR Business partnership roles. Ms.
Missotten holds a Master's Degree in Roman Philology from KU
Leuven, a DEA in Italian Culture and Linguistics from the Paris IV
Sorbonne (France) and L’Università Cattolica di Milano. Over the
years, she completed her education with several systemic
psychology and coaching certifications and business courses,
amongst others, from INSEAD, Fontainebleau (France).
113
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Valeria Cnossen
is appointed as General Counsel,
responsible for Compliance &
Ethics, the Corporate Secretary
Office and Intellectual Property, and
member of the Executive
Committee at Galapagos. Ms.
Cnossen joined Galapagos on 1
August 2022. She previously was
General Counsel of the Consumer
Health Group at Johnson &
Johnson where she was a strategic
partner and key advisor on laws
and regulations, transactions and
emerging areas, impacting the
business such as digital, transparency, sustainability and public
policy. Prior to that, she held leadership roles within the Medical
Devices and Pharmaceutical Sectors of Johnson & Johnson. Ms.
Cnossen joined Johnson & Johnson in 2011 through the acquisition
of Crucell, where she was Head of Legal and Compliance. Prior to
joining Crucell, Ms. Cnossen was in private legal practice at De
Brauw Blackstone Westbroek in the Netherlands, and Cravath,
Swaine & Moore in New York City. Ms. Cnossen is a purpose-driven
leader, known for her ability to develop high-performing teams and
the careers of others, especially as a mentor for women.
114
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
About the Executive Committee
The following table sets forth certain information with respect to the members of our
Executive Committee during the financial year ended on 31 December 2022:
Name(1)
Onno van de Stolpe(2)
Stoffels IMC BV(3)
Bart Filius
Andre Hoekema(4)
Walid Abi-Saab(5)
Michele Manto
Position
Nationality
Year of birth
or incorporation
Year of initial
appointment
Chief Executive Officer
Chief Executive Officer
Dutch
Belgian
President, Chief Financial
Officer & Chief Operating
Officer
Chief Business Officer
Chief Medical Officer
Dutch
Dutch
U.S. &
Lebanese
Chief Commercial Officer
Italian
1959
2022
1970
1957
1965
1973
1999
2022
2014
2005
2017
2020
(1) Following the introduction of a one-tier board structure at the Company, the Board of Directors resolved to appoint the members of the
(former) Management Board as member in the Executive Committee as from 26 April 2022
(2) Member and CEO until 31 March 2022
(3) Member as from 26 January 2022 – CEO as from 1 April 2022 – permanently represented by Dr. Paul Stoffels
(4) Member until 31 October 2022
(5) Member until 31 December 2022
The Executive Committee has been entrusted by the Board of Directors with the
executive management and running of the Company. Without prejudice to the overall
responsibility and tasks of the Board of Directors regarding the management and control
of the Company, the tasks of the Executive Committee include the following matters
identification and development of strategic
(without
possibilities and proposals which may contribute to the Company’s development in
general, the management of the Company and Galapagos 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 the Company and
Galapagos group.
the research,
limitation):
The Executive Committee meets as often as necessary to ensure its effective operation,
and in principle once per month.
On 31 December 2022, the Executive Committee consisted of four people: Stoffels IMC
BV (permanently represented by Dr. Paul Stoffels) (CEO and Chairman of the Executive
Committee), Bart Filius (President, CFO and COO), Dr. Walid Abi-Saab (CMO) and Michele
Manto (CCO), representing four different nationalities and different age categories. Dr.
André Hoekema’s mandate as CBO and Executive Committee member ended per 31
October 2022. Dr. Walid Abi-Saab's mandate as CMO and Executive Committee member
ended per 31 December 2022. He will stay with Galapagos until 31 May 2023 to ensure a
smooth transition.
Furthermore,
backgrounds, as can be read in each of their profiles (above).
the Executive Committee members have different educational
115
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
The members of the Executive Committee are appointed by the Board of Directors
upon recommendation of the Nomination Committee. In proposing candidates for the
Executive Committee, particular consideration is given to educational and professional
background, complementary skills, knowledge and experience, as well as to diversity in
age, gender and nationality.
Galapagos NV’s share capital and shares
Share capital increases and issue of shares by
Galapagos NV in 2022
On 1 January 2022, the share capital of Galapagos NV amounted to €354,582,005.11
represented by 65,552,721 shares.
In the course of 2022, there were three capital
increases resulting from the exercise of subscription rights under subscription right
plans, resulting in the issuance of 282,790 new shares, an increase of the share capital by
€1,529,893.90 and an increase of the issuance premium account by €5,165,462.70.
At the end of 2022, the share capital of Galapagos NV amounted to €356,111,899.01
represented by 65,835,511 shares.
During 2022, the Board of Directors issued subscription rights under five Subscription
Right Plans:
On 13 January 2022, the Supervisory Board (now the Board of Directors) issued
30,000 subscription rights, after acceptance by the beneficiary, within the framework
of the authorized capital, for the benefit of a member of the personnel of the group
under Subscription Right Plan 2022 (A).
The subscription rights issued under Subscription Right Plan 2022 (A) have a term of
eight years as of the date of the offer and 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).
On 26 January 2022, the Supervisory Board (now the Board of Directors) issued
1,000,000 subscription rights, after acceptance by the beneficiary, within the
framework of the authorized capital, for the benefit of a member of the personnel of
the group under Subscription Right Plan 2022 (B).
The subscription rights issued under Subscription Right Plan 2022 (B) have a term of
eight years as of the date of the offer and an exercise price of €50.00.
116
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
On 6 May 2022, the Board of Directors issued 2,091,239 subscription rights, after
acceptance by the beneficiaries, within the framework of the authorized capital, for
the benefit of Executive Committee members and employees of the Galapagos group
under new subscription right plans: “Subscription Right Plan 2022 BE”, “Subscription
Right Plan 2022 RMV” and “Subscription Right Plan 2022 ROW”.
The subscription rights issued under Subscription Right Plan 2022 BE, Subscription
Right Plan 2022 RMV and Subscription Right Plan 2022 ROW have a term of eight
years as of the date of the offer and subscription rights issued under the first offer
have an exercise price of €57.46 (the closing price of the share on Euronext
Amsterdam and Brussels on the day preceding the date of the first offer) and under
the subsequent offer of €51.58 (the closing price of the share on Euronext Amsterdam
and Brussels on the day preceding the date of the second offer).
Number and form of Galapagos shares
Of the 65,835,511 shares of Galapagos NV outstanding at the end of 2022, 5,846 were
registered shares and 65,829,665 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 Board of Directors 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.
Galapagos NV’s authorized capital
In accordance with the Articles of Association, the Extraordinary Shareholders’ Meeting
of Galapagos NV authorized the Board of Directors to increase the share capital of
Galapagos NV, in one or several times, and under certain conditions set forth inextenso
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. This
general authorization will expire on 12 November 2024; and
117
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
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 was 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 could, however, only be
used in a number of specific circumstances and upon a resolution of the Board of
Directors that all independent directors (within the meaning of article 7:87 of the
Belgian Companies Code) approve. This specific authorization expired on 30 May
2022.
In 2022, Galapagos NV’s Board of Directors made use of the right to increase the capital
in the framework of the authorized capital on three occasions:
On 13 January 2022, in connection with the issuance of Subscription Right Plan
2022 (A) under which a maximum of 30,000 new shares could be issued for a total
maximum capital increase of €162,300.00 (plus issuance premium);
On 26 January 2022, in connection with the issuance of Subscription Right Plan 2022
(B) under which a maximum of 1,000,000 new shares could be issued for a total
maximum capital increase of €5,410,000.00 (plus issuance premium); and
On 6 May 2022, in connection with the issuance of Subscription Right Plan 2022
BE, Subscription Right Plan 2022 RMV and Subscription Right Plan 2022 ROW, under
which a maximum of 2,326,025 new shares could be issued for a total maximum
capital increase of €12,583,795.25 (plus issuance premium).
On 31 December 2022, an amount of €24,889,284.17 still remained available under the
general part of the authorized capital.
When increasing the share capital within the limits of the authorized capital the Board
of Directors may, if in Galapagos NV’s interest, restrict or cancel 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.
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.
118
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Within the framework of the powers granted to it under the authorized capital, the
Board of Directors may also increase Galapagos NV’s capital as specified in its Articles of
Association.
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 Board of Directors has currently not been authorized by an Extraordinary
Shareholders’ Meeting to purchase or sell its own shares.
On 31 December 2022, 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.
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.
119
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
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 of the
agreement (ChangeinControlofGalapagos), entitling AbbVie, to oblige Galapagos NV
to take appropriate measures to avoid the disclosure of 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 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 2022 were Gilead Therapeutics A1 Unlimited
Company (16,707,477 shares or 25.38%), Van Herk Investments B.V. (4,635,672 shares or
7.04%), EcoR1 Capital LLC (3,407,246 shares or 5.18%) and FMR LLC (3,884,633 shares or
5.90%).
120
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Major shareholders on 31 December 2022
At the end of 2022, our CEO owned 1,000,000 subscription rights. The other members of
our Executive Committee held an aggregate of 29,520 shares and 864,000 subscription
rights. The members of our Board of Directors held an aggregate of 3,889 shares and
75,000 subscription rights. Each subscription right entitles its holder to subscribe to one
share of Galapagos NV.
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 Board members Daniel O’Day and Linda
Higgins are representatives of Gilead.
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
121
Galapagos NV Annual Report 2022
25.38%Gilead56.45%Other shareholders7.04%Van Herk Investments5.18%EcoR1 Capital5.90%FMR LLC0.05%Insiders CORPORATE GOVERNANCE
Company subscribed to 6,828,985 new Galapagos shares at a price of €140.59 per share,
which included an 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, both of whom are still directors of Galapagos NV today.
On 22 October 2019, our Extraordinary Shareholders’ Meeting approved the issuance of 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 of the
Company. 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.
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 of the Company. The initial
Warrant B 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 from 23 August
2019, subject to and upon approval by the Company's Shareholders’ Meeting, Gilead
Therapeutics A1 Unlimited Company will be issued a warrant with substantially similar
terms, including exercise price, to the initial Warrant B. This subsequent Warrant B will
expire on the earlier of (i) the date that is five years after the fifth anniversary of the
closing and (ii) the date that the warrant is issued.
Gilead and Gilead Therapeutics A1 Unlimited Company are subject to certain standstill
restrictions until 10 years following the closing, which occured on 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 beginning on 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
122
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
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 for a period of five
years until 22 August 2024. In 2022, Gilead and Galapagos agreed to amend the share
subscription agreement for conformity with the change from a two-tier to a one-tier
governance system by Galapagos.
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 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 the marketing authorization
holder for filgotinib outside of Europe,
including in Japan, where filgotinib is co-
marketed with Eisai. The transfer was subject to applicable local legal, regulatory and
consultation requirements. Most activities transferred to Galapagos by 31 December
2021 and we completed the transition during 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, (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 from Gilead to Galapagos, and (3) the Second
Amended and Restated License and Collaboration Agreement of 24 December 2021,
123
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
amending and restating the existing collaboration agreement, which went into 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, a safety study in men with moderately
to severely active UC and CD to assess semen parameters while taking filgotinib, and its
long-term extension, from Gilead 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 continued 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 CD, 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 was intended to be completed by 30 June 2022 and was completed by March
2023. From 1 April 2022, Galapagos is 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 LTE from Gilead to Galapagos, which transfer
was largely completed by 31 December 2022.
All commercial economics on filgotinib in Europe transferred 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. 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, an additional €75 million
in April 2021 and €50 million in 2022. Furthermore, Gilead made a one-time payment of
$15 million to Galapagos in 2022 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 $275 million and sales-based milestone payments of up to
$600 million.
On 28 March 2022 filgotinib was approved by the Japanese Ministry of Health, Labour
and Welfare for UC, for which we received a $20.0 million (€18.2 million) regulatory
milestone payment from Gilead in May 2022.
124
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
In March 2022, Gilead and Galapagos agreed to further amend the collaboration by
adding the following countries to the Galapagos territory: Andorra, San Marino, Monaco,
and Vatican City.
Our remuneration policy
A revised remuneration policy is applicable as of 1 January 2022, and has been approved
by the 2022 Shareholders' Meeting. Such document is available on our website.
Remuneration report
Introduction: remuneration report 2022
Galapagos’ remuneration policy
Galapagos’ current remuneration policy was prepared in accordance with the Belgian
Companies Code and approved by Galapagos’ shareholders at the 2022 Annual
Shareholders’ Meeting with 64.40% of shareholder votes. The policy became effective as
from 1 January 2022 and applies for the reporting year beginning on 1 January 2022. In
this report we will look back at 2022 and reflect on how the progress made with regard
to our 2022 corporate objectives has influenced the remuneration outcomes.
Galapagos encourages an open and constructive dialogue with its shareholders to
discuss its approach to governance, including remuneration, and to understand what
they consider best practices. The disclosure in the remuneration report reflects the input
received from Galapagos’ shareholders over the years as well as developments in the
legislative framework, including the introduction of the comparison table and pay ratio.
The objective of our remuneration policy is to attract, motivate and retain diverse,
qualified and expert individuals who are key in order to achieve our strategic and
operational objectives. Our further goals are to be competitive in the appropriate market
by benchmarking against relevant peer groups, incentivizing performance at the highest
possible level, allowing for differential rewards according to individual performance, not
to discriminate on any grounds other than performance, and to reinforce an open, fair,
consistent and equitable culture.
Peer group and benchmarking
Galapagos’ remuneration policy strives to take into account relevant benchmarks with
appropriate peer companies and, for the Executive Committee members, the group’s
performance management system is also considered. Over the years, our Nomination
and Remuneration Committee has conducted such benchmarking exercise and has
been supported by external advisors during the performance of its responsibilities.
125
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Currently a new benchmarking exercise for Executive Committee roles is ongoing in the
light of our strategic transformation and reviewed R&D strategy, focused on immunology
and oncology with the aim to transform patient outcomes through life-changing science
and innovation. Galapagos is at a pivotal juncture in its history to reset its strategic path,
and is building an oncology franchise where attracting and retaining highly specialized
expertise in an international labor market is essential to succeed.
The peer groups currently determined by the Remuneration Committee consist of
publicly listed biotechnology companies with a comparable market capitalization in
the U.S. and biotechnology and pharmaceutical companies with a broadly comparable
market capitalization in Europe,
in both cases taking into account the R&D and
commercialization profile and business model to the extent possible. The Committee
considers both these reference points given the talent pool for the Executive Committee
extends to both Europe and the U.S., with the majority of our competitors based in
the U.S. These benchmarks will support the Remuneration Committee in its decision
making, also taking into account Galapagos’ strategic context and requirements,
company performance, individual performance and skills as well as broader workforce
considerations. Finally, the committee also determined to maintain a view to a Bel20
(the benchmark stock market index of Euronext Brussels) general industry peer group
(excluding financial services companies) to ensure an understanding of the local Belgian
listed market given the location of our headquarters; however, given the international
nature of our executive leadership and specific sector considerations, it is not the
reference to inform our pay policy.
Remuneration of the members of the Board of
Directors
Remuneration structure components
The remuneration of the members of the Board of Directors consists of (i) a fixed annual
cash amount, and (ii) an equity-based component. The remuneration of the directors
does not contain a variable component, and hence no performance criteria apply to
their remuneration.
Cash
remuneration
Equity-based
remuneration
126
Galapagos NV Annual Report 2022
TOTAL
REMU-
NERATION
N/A(3)
€165,643
€115,000
€115,000
CORPORATE GOVERNANCE
the annual
In accordance with our
Shareholders’ Meeting of 28 April 2020, the remuneration of the members of the Board of
Directors for the exercise of their mandate during the financial year ending 31 December
2022 consisted of the following components:
remuneration policy and the decision of
Board of Directors
Audit Committee
Nomination
Committee(2)
Remuneration
Committee(2)
Directors
Cash remuneration
Chairman
Member
Equity-based
remuneration
Cash
granted to
acquire
GLPG
shares(1)
Acquired
GLPG
shares(1)
Cash remuneration
Cash remuneration
Cash remuneration
Chairman
Member
Chairman
Member
Chairman
Member
Stoffels IMC BV,
permanently
represented by
Dr. Paul Stoffels(3)
Dr. Rajesh Parekh(4)
Dr. Mary Kerr
Mr. Peter Guenter
Dr. Elisabeth Svanberg
Mr. Jérôme Contamine(5)
Dr. Dan Baker(5)
Mr. Howard Rowe(6)
Ms. Katrine Bosley(6) (7)
Mr. Daniel O’Day(8)
Dr. Linda Higgins(8)
N/A
N/A
€32,143
€33,929
€66,000
€50,000
€50,000
€50,000
€50,000
€50,000
€50,000
€34,066
€34,000
€34,066
€34,000
€16,071
€16,000
€16,071
€-
€15,000
€15,000
697
528
539
532
366
363
158
-
€13,626
€6,429
N/A
€13,571
€20,000
€10,220
€15,000
€115,000
€10,220
€102,131
€4,821
€68,066
€38,500
€20,892
N/A(8)
N/A(8)
(1) The company grants a gross amount equal to the respective Board member’s annual cash remuneration, to use the net portion (after taxes) to acquire shares of Galapagos in the open
market.
(2) Until 26 April 2022, the company had a Nomination and Remuneration Committee and as of 26 April 2022 we have two committees, being the Nomination Committee and the
Remuneration Committee.
(3) Chairman of the Board of Directors as of 26 April 2022. Stoffels IMC BV does not receive any remuneration for its mandate as Chairman of the Board of Directors or Committee member.
(4) Chairman of the Board of Directors until 26 April 2022.
(5) Director as of 26 April 2022.
(6) Director until 26 April 2022.
(7) Ms. Bosley waived her equity-related remuneration for financial year 2022.
(8) Mr. O’Day and Dr. Higgins, both Gilead representatives, do not receive any remuneration for their mandate as members of the Board of Directors.
Effective from 26 April 2022, our new Chief Executive Officer, Stoffels IMC BV
(permanently represented by Dr. Paul Stoffels) has been appointed as the Chairman of
the Board of Directors of Galapagos. The Chief Executive Officer will only be remunerated
for the performance of its executive functions as Chief Executive Officer and is not
entitled to any additional remuneration for its mandates of Chairman of the Board of
Directors or of any Committee.
127
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Cash remuneration
The members of the Board of Directors receive a fixed annual cash amount, irrespective
of the number of Board meetings that are held during the year. The remuneration of
the directors does not contain a variable part. These Board fees are paid in quarterly
installments at the end of each calendar quarter.
For the financial year 2022 the previous Chairman of the Board of Directors, Mr. Rajesh
Parekh, received a total cash remuneration of €67,072 and the other members €50,000
each (if in function for the entire year). In addition, Committee membership entitles the
directors to an additional €15,000 in cash and Committee chairmanship to an additional
€20,000 in cash (if in function for the entire year).
Equity based remuneration
In accordance with provision 7.6 of the 2020 Code, Galapagos also grants members of
the Board of Directors an equivalent to a remuneration in shares, being a cash amount
equal to the respective Board member’s annual cash remuneration whereby the net
portion (after taxes) should be used to acquire Galapagos shares. During the financial
year 2022, the members of the Board of Directors received the following additional cash
compensation: for the previous Chairman of the Board of directors €100,000 (prorated
amount if not in function for the entire year) and for the other members €50,000 each
(prorated amount if not in function for the entire year), in each case subject to the
requirement to use the net amount (after taxes) to acquire Galapagos shares. One former
Board member waived the equity-based remuneration for the financial year 2022. These
share purchases resulted in the number of shares identified in the table above. The
shares that each director so acquires are to be held until at least one year after the
Board member leaves the Board of Directors and at least three years after the time of
acquisition. These latter payments make up the equivalent of an equity component of
the members of the Board of Directors’ remuneration, as recommended by the 2020
Code.
As of 2020 Galapagos does not grant any subscription rights to members of the Board of
Directors (non-executive directors).
128
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Remuneration of Executive Committee members
Remuneration structure components
The total remuneration package of the CEO and other Executive Committee members
consists of (i) fixed remuneration, being a base salary, pension and other benefits and (ii)
variable remuneration, being a cash bonus, the grant of restricted stock units (“RSUs”)
and subscription rights (“SRs”) that will be further outlined below. For the variable part
of the Executive Committee members’ remuneration, performance criteria apply.
Short-term incentive
Long-term incentives
Base salary
Pension &
other benefits
Cash bonus
RSUs
Subscription
rights
Performance criteria and evaluation methods for Executive
Committee members
For 2022, the performance criteria considered in decision-making for cash bonuses
(short-term incentive) and annual RSU grants (long-term incentive) 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 Remuneration
Committee as well as by the Board of Directors.
company
focused on the discovery, development
Our ambition is to continue establishing ourselves as a successful commercial stage
biopharmaceutical
and
commercialization of innovative medicines in areas of unmet medical needs with the
aim to improve the lives of people suffering from serious diseases. In order to achieve
this long-term goal, we are striving for continued innovation in our research efforts
and sound clinical progress year over year, while maintaining a healthy cash position.
Considering our new strategy, we shifted from novel target-based discovery to patient-
focused medical need research and development with a focus on our key therapeutic
areas of immunology and oncology.
In addition, our corporate development and
business goals aim to foster the growth of the company and value creation for all
shareholders, including via business development opportunities, to complement our
internal pipeline. Finally, our commercial development goal intends to continue to build
our filgotinib franchise throughout Europe,
in order to become a commercially
successful biopharmaceutical company which brings transformational medicines to
patients (subject to having obtained governmental approvals).
129
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
2022 CORPORATE OBJECTIVES
Each equally weighted
Corporate
Actual cash burn versus guidance, training and compliance goals
Business Development
Achievement of business development transaction(s)
Research progress
Select new targets and nominate pre-clinical candidates to strengthen our Discovery portfolio.
Identify a new target from pre-clinical research on new drug modalities
Clinical trial progress
Advance compounds to the next clinical development phase to mature the development
pipeline. Initiate the expansion of the use of filgotinib so that it may become accessible to a
broader patient population
Commercial development
Execution of a successful Europe launch for filgotinib, including sales and earnings target
The individual performance evaluation is supported by the group’s performance
management system that assesses the performance of all employees (including
Executive Committee members) over the calendar year against a set of objectives
determined at the start of the year.
Taking all considerations into account, Galapagos’ policy is to grant a number of
subscription rights each year based on a consideration of each Executive Committee
member’s role, individual performance for the performance year as well as individual
impact on long-term value creation.
The Remuneration Committee is responsible for evaluating the Executive Committee
members’ performance in accordance with the principles set out above. The
Remuneration Committee is composed exclusively of non-executive directors and a
majority of its members qualify as independent Board members. This helps prevent the
occurrence of conflicts of interest regarding the implementation of the remuneration
policy in relation to the Executive Committee members. The members of the Executive
Committee are not invited to take part in any discussions of the Remuneration
Committee related to their own individual remuneration.
The level of achievement of the objectives for the CEO is assessed at the end of each
year by the Remuneration Committee and discussed and finally established by the Board
of Directors. The level of achievement of the objectives of the other members of the
Executive Committee is assessed by the CEO at the end of the year, discussed by the
Remuneration Committee and finally established by the Board of Directors.
130
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Executive Committee
Fixed remuneration
Variable remuneration
Base salary
Other
compo-
nents(1)
Pension
Cash
bonus(2)
Multi-year variable
Vested
RSUs(3)
Granted
SRs(4)
TOTAL REMU-
NERATION
Proportion of fixed
and variable
remuneration
Stoffels IMC BV, permanently represented
by Dr. Paul Stoffels(5)
Onno van de Stolpe(6)
€562,500
€-
€-
€337,500
€160,524
€22,970
€19,500
€-
€-
€-
Other ExCom members(7)
€1,617,538
€82,873
€220,575
€659,300 €6,103,529
€570,000
€1,470,000
Fixed: 38.27%
Variable: 61.73%
€-
€-
€202,994
Fixed: 100%
€8,683,815
Fixed: 22.12%
Variable: 77.88%
(1) Other components are the value of the benefits and perquisites awarded, such as a company car, tax advisory services and health and disability insurance.
(2) The one-year variable is the short-term cash bonus awarded to each Executive Committee member in respect of 2022 and paid in April 2023.
(3) During financial year 2022 RSUs vested under RSU Plan 2019.I, 2019.II, 2019.III, 2020.II and 2021 IV and pay-outs occurred accordingly.
(4) The value of the subscription rights (“SRs”) granted during the financial year 2022 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 2022.
(5) CEO as of 1 April 2022.
(6) CEO until 31 March 2022. Mr. Onno van de Stolpe's base salary is €160,524, including €5,239.02 in the form of personal pension contributions. The €19,500 pension amount does not
include the amount of €5,239.02, which is part of Mr. Onno van de Stolpe's fixed base salary.
(7) Pursuant to the applicable Belgian legislation for the two-tier governance system, we hereby disclose the individual figures for the Executive Committee members part of the
aggregate amounts disclosed under “Other ExCom members”.
Other ExCom members
Fixed remuneration
Variable remuneration
Base
salary
Other
compo-
nents(1)
Pension
Cash
bonus(2)
Multi-year variable
Vested
RSUs(3)
Granted
SRs(4)
TOTAL REMU-
NERATION
Proportion of
fixed and variable
remuneration
Bart Filius
€515,000
€25,527
€63,300
€230,000 €1,974,467
Andre Hoekema
€317,775
€25,328
€46,125
€100,000 €1,961,547
Walid Abi-Saab
€434,563
€14,203
€62,400
€165,000 €1,543,240
Michele Manto
€350,200
€17,815
€48,750
€164,300
€624,275
€2,808,294
€2,450,775
€2,219,406
€1,205,340
Fixed: 21.50%
Variable: 78.50%
Fixed: 15.88%
Variable: 84.12%
Fixed: 23.03%
Variable: 76.97%
Fixed: 34.58%
Variable: 65.42%
€-
€-
€-
€-
Fixed remuneration
The Board of Directors, upon recommendation of the Remuneration Committee,
decided that for the financial year 2022 each member of the Executive Committee,
including the CEO, 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.
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 (future) impact
on long-term value creation. Bonuses consist both of a short-term cash component and
a long-term RSU component. Members of the Executive Committee were also offered
subscription rights in 2022.
Under our remuneration policy, the CEO’s cash bonus can be maximum 75% of its base
salary. The aggregate cash bonuses of the other members of the Executive Committee
can be maximum 50% of the aggregate base salaries. An equivalent number of RSUs will
131
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
be granted to the CEO and the other members of the Executive Committee under the
RSU Annual Long-Term Incentive Plan.
(a) Short-term variable remuneration
Upon recommendation of the Remuneration Committee, the Board of Directors
determined an overall achievement of 80% (out of a maximum of 100%) against the 2022
corporate objectives. In arriving at this determination, the Board considered that some
of the objectives were not achieved, some had been met and some overachieved. This
determination included an evaluation of activities that were either stopped, started or
modified by the strategic reset that occurred during the course of the year following the
appointment of our new CEO.
The performance highlights over 2022 included: (i) the acquisition of CellPoint &
AboundBio, propelling us into the field of oncology, and next generation CAR-Ts and
biological drug modalities, (ii) Jyseleca® performance beyond expectations, with actual
full year net sales of €87.6 million, at the upper end of the guidance of €80 – 90 million
and above the initial 2022 net sales guidance of €65 – 75 million – reaching 18,000
patients in Europe and reimbursed for RA in 15 countries, and for UC in 11 countries,
(iii) regulatory progress, including completion of the PRAC article 20 procedure for all
JAK inhibitors in Europe to treat certain inflammatory disorders, including filgotinib, and
separately, a positive CHMP opinion on the type II variation application for filgotinib
based on the MANTA and MANTA-RAy studies, resulting in a label update of the European
label for RA and UC, (iv) the launch of our new Forward, Faster strategy involving the
transformation of our R&D organization into a fit-for-purpose R&D organization, built
around our key therapeutic areas oncology and immunology and (v) initial encouraging
safety and efficacy results from ongoing Phase 1/2 study in refractory/relapsed non-
Hodgkin’s lymphoma with CD19 CAR-T candidate, GLPG5101, manufactured at point-of-
care.
The 80% corporate funding level is applicable to the wider Galapagos workforce for the
corporate component of their bonus funding, including the members of the Executive
for the CEO upon recommendation of the
Committee. The Board of Directors,
Remuneration Committee and for the other Executive Committee members upon
proposals of the CEO, considered this level of funding, as applied to the wider workforce,
together with individual performance of Executive Committee members in order to
determine the individual cash bonus outcomes for 2022 set out in the total remuneration
table above: Stoffels IMC BV, permanently represented by Dr. Paul Stoffels (€337,500; 60%
of 2022 base salary)28, Mr. Bart Filius (€230,000; 45% of 2022 base salary), and Mr. Michele
Manto (€164,300; 47% of 2022 base salary). Our former Executive Committee members
have the following cash bonus outcomes: Dr. Andre Hoekema (€100,000; 31% of 2022
base salary) and Dr. Walid Abi-Saab (€165,000; 38% of 2022 base salary). These 2022 cash
bonuses will be paid in April 2023. With the exception of the retired Chief Business Officer
and Chief Medical Officer, each of the members of the Executive Committee will be
granted an equivalent number of RSUs under the 2023 RSU Annual Long-Term Incentive
Plan as long-term variable remuneration.
28
The conflict of interest procedure within the meaning of article 7:96 of the Belgian Companies Code has been applied for the 2022 bonus
decision for Stoffels IMC BV, a full disclosure shall happen in the annual report for the financial year 2023.
132
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
(b) Long-term variable remuneration
In 2022, our (new) CEO, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels),
was offered 1,000,000 subscription rights under Subscription Right Plan 2022 (B) as a
sign-on remuneration given the strategic importance of hiring Dr. Stoffels as CEO, his
knowledge and experience in the pharmaceutical sector and leadership capabilities. He
accepted all the granted subscription rights.
The members of the Executive Committee were offered new subscription rights under
Subscription Right Plan 2022 BE and each accepted all subscription rights granted as
per the following: Mr. Bart Filius: 68,000 subscription rights, Dr. Walid Abi-Saab: 32,000
subscription rights and Mr. Michele Manto: 24,000 subscription rights. Further reference
is made to the Equity components of the remuneration section, which contains, among
others, a description of the 2022 grant of subscription rights.
The total remuneration table above sets forth the value of the number of RSUs vested
and paid out in 2022 for each member of the Executive Committee. 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. During 2022, there were RSU vestings under five different RSU plans: Plan 2019.I,
Plan 2019.II, Plan 2019.III, Plan 2020.II and Plan 2021.IV. The pay-outs to the Executive
Committee 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 Executive Committee members in 2022,
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 members of the Executive Committee in 2019, 2020, 2021 and 2022.
Pension and other components
In addition, the members of the Executive Committee enjoy a number of benefits in line
with our remuneration policy such as a retirement plan, insurance programs (covering
life insurance, disability, travel insurance and health), company cars and the provision
of certain tax 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 Executive Committee member are
summarized in the total remuneration table above.
Equity components of the remuneration
Subscription rights awarded, exercised or expired
In 2022, we issued subscription right plans for the benefit of employees of the group
and of Executive Committee members: Subscription Right Plan 2022 (A), Subscription
Right Plan (B), Subscription Right Plan 2022 BE, Subscription Right Plan 2022 RMV and
Subscription Right Plan 2022 ROW. Each subscription right gives the right to subscribe
133
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
for one new Galapagos share. Our CEO was offered new subscription rights under
Subscription Right Plan 2022 (B) and the members of the Executive Committee were
offered new subscription rights under Subscription Right Plan 2022 BE, subject to
acceptance. The final number of accepted subscription rights under Subscription Right
Plan 2022 (B) was enacted by the notary deed of 25 March 2022 and under Subscription
Right Plan 2022 BE by notary deeds of 7 July 2022 and 2 September 2022. The table
below sets forth the numbers of subscription rights offered and accepted by the CEO and
each other member of the Executive Committee in 2022, respectively under Subscription
Right Plan 2022 (B) and Subscription Right Plan 2022 BE.
The main characteristics of the subscription right plans offered to the members of the
Executive Committee 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;
Good and bad leaver rules apply in case of termination prior to the end of the vesting
period.
Under Subscription Right Plan 2022 (B), the subscription rights have a lifetime of eight
years and an exercise price of €50.00. The subscription rights under Subscription Right
Plan 2022 (B) 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 2026.
Under Subscription Right Plan 2022 BE, the subscription rights have a lifetime of eight
years and an exercise price of €57.46. For all the beneficiaries under the Subscription
Right Plan 2022 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 2026 and are not transferable.
The table below sets forth the main characteristics for subscription right plans issued
during previous years and 2022.
As from 1 January 2020, Galapagos no longer grants any subscription rights to members
of the Board of Directors, 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, members of the Board
of Directors were granted subscription rights and hence the table below also contains
disclosures for Board members.
No subscription rights expired for members of the Board of Directors or Executive
Committee in 2022.
The table below sets forth the subscription rights outstanding and exercisable per 31
December 2022 for the (former) members of the Board of Directors or Executive
Committee, the subscription rights awarded to the (former) Executive Committee
134
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
members during 2022 and exercised by the (former) members of the Board of Directors
or Executive Committee in 2022:
Plan(1)
Grant date
Vesting period
Exercise period
Exercise
price
Number of
SRs out-
standing
per 31/12/
2022
Number of
SRs exer-
cisable per
31/12/
2022
SRs
offered &
accepted
during
2022
SRs
exercised
during
2022
SRs
expired
in 2022
Directors(2)
WP 2017
30/08/2017
Dr. Rasjesh Parekh
WP 2018
24/08/2018
WP 2019
12/07/2019
WP 2014
25/07/2014
WP 2015
30/04/2015
WP 2015.B
02/03/2016
WP 2016
16/08/2016
WP 2017
30/08/2017
WP 2018
24/08/2018
WP 2019
12/07/2019
WP 2015
30/04/2015
WP 2015.B
02/03/2016
WP 2016
16/08/2016
WP 2017
30/08/2017
WP 2018
24/08/2018
WP 2019
12/07/2019
WP 2017
30/08/2017
WP 2018
24/08/2018
WP 2019
12/07/2019
WP 2019
12/07/2019
Mr. Howard Rowe
Ms. Katrine Bosley
Dr. Mary Kerr
Mr. Peter Guenter
36 months
1/36 per month
01/01/2021
– 16/05/2025
36 months
1/36 per month
01/01/2022
– 18/04/2026
36 months
1/36 per month
01/01/2023
– 10/04/2027
36 months
1/36 per month
01/01/2018
– 24/07/2022
36 months
1/36 per month
01/01/2019
– 29/04/2023
36 months
1/36 per month
02/03/2019
– 21/12/2023
36 months
1/36 per month
01/01/2020
– 31/05/2024
36 months
1/36 per month
01/01/2021
– 16/05/2025
36 months
1/36 per month
01/01/2022
– 18/04/2026
36 months
1/36 per month
01/01/2023
– 10/04/2027
36 months
1/36 per month
01/01/2019
– 29/04/2023
36 months
1/36 per month
02/03/2019
– 21/12/2023
36 months
1/36 per month
01/01/2020
– 31/05/2024
36 months
1/36 per month
01/01/2021
– 16/05/2025
36 months
1/36 per month
01/01/2022
– 18/04/2026
36 months
1/36 per month
01/01/2023
– 10/04/2027
36 months
1/36 per month
01/01/2021
– 16/05/2025
36 months
1/36 per month
01/01/2022
– 18/04/2026
36 months
1/36 per month
01/01/2023
– 10/04/2027
36 months
1/36 per month
01/01/2023
– 10/04/2027
€80.57
15,000
15,000
€79.88
15,000
15,000
€95.11
15,000
€14.54
0
0
2,520
€28.75
2,520
2,520
€49.00
7,500
7,500
€46.10
7,500
7,500
€80.57
7,500
7,500
€79.88
7,500
7,500
€95.11
7,500
€28.75
2,520
2,520
€49.00
7,500
7,500
€46.10
7,500
7,500
€80.57
7,500
7,500
€79.88
7,500
7,500
€95.11
7,500
€80.57
7,500
7,500
€79.88
7,500
7,500
€95.11
7,500
€95.11
7,500
Executive Committee members
Stoffels IMC BV,
permanently
represented by
Dr. Paul Stoffels
SR Plan
2022 (B)
25/03/2022
100%
3rd year after year of
grant 01/01/2026
01/01/2026
– 25/01/2030
€50.00 1,000,000
0 1,000,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
135
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting period
Exercise period
Exercise
price
Number of
SRs out-
standing
per 31/12/
2022
Number of
SRs exer-
cisable per
31/12/
2022
SRs
offered &
accepted
during
2022
SRs
exercised
during
2022
SRs
expired
in 2022
WP 2014
14/10/2014
WP 2015
29/06/2015
WP 2015.B
02/03/2016
WP 2016
31/07/2016
Mr. Onno van de Stolpe
WP 2017
30/08/2017
WP 2018
18/06/2018
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
16/06/2020
18/08/2021
WP 2017
30/08/2017
WP 2018
18/06/2018
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
SR Plan
2022 BE
16/06/2020
18/08/2021
02/09/2022
WP 2014
14/10/2014
WP 2015
29/06/2015
Mr. Bart Filius
Dr. Andre Hoekema
WP 2015.B
02/03/2016
WP 2016
31/07/2016
WP 2017
30/08/2017
WP 2018
18/06/2018
36 months
1/36 per month
01/01/2018
– 24/07/2022
36 months
1/36 per month
01/01/2019
– 29/04/2023
36 months
1/36 per month
02/03/2019
– 21/12/2023
36 months
1/36 per month
01/01/2020
– 31/05/2024
36 months
1/36 per month
01/01/2021
– 16/05/2025
36 months
1/36 per month
01/01/2022
– 18/04/2026
36 months
1/36 per month
01/01/2023
– 10/04/2027
100%
3rd year after year of
grant 01/01/2024
100%
3rd year after year of
grant 01/01/2025
100%
3rd year after year of
grant 01/01/2021
100%
3rd year after year of
grant 01/01/2022
100%
3rd year after year of
grant 01/01/2023
100%
3rd year after year of
grant 01/01/2024
100%
3rd year after year of
grant 01/01/2025
100%
3rd year after year of
grant 01/01/2026
100%
3rd year after year of
grant 01/01/2018
100%
3rd year after year of
grant 01/01/2019
100%
3rd year after year of
grant 02/03/2019
100%
3rd year after year of
grant 01/01/2020
100%
3rd year after year of
grant 01/01/2021
01/01/2024
– 17/04/2028
01/01/2025
– 30/04/2029
01/01/2021
– 16/05/2025
01/01/2022
– 18/04/2026
01/01/2023
– 10/04/2027
01/01/2024
– 17/04/2028
01/01/2025
– 30/04/2029
01/01/2026
– 06/05/2030
01/01/2018
– 24/07/2022
01/01/2019
– 29/04/2023
02/03/2019
– 21/12/2023
01/01/2020
– 31/05/2024
01/01/2021
– 16/05/2025
100% 01/01/2022
100,000
100,000
€14.54
€28.75
0
0
0
0
€49.00
100,000
100,000
€46.10
100,000
100,000
€80.57
100,000
100,000
€79.88
100,000
100,000
€95.11
100,000
€168.42
85,000
€64.76
85,000
€80.57
60,000
60,000
€79.88
80,000
80,000
€95.11
65,000
€168.42
50,000
€64.76
50,000
€57.46
68,000
68,000
€14.54
0
0
10,000
€28.75
20,000
20,000
10,000
€49.00
40,000
40,000
€46.10
55,000
55,000
€80.57
€79.88
60,000
50,000
60,000
50,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
136
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting period
Exercise period
Exercise
price
Number of
SRs out-
standing
per 31/12/
2022
Number of
SRs exer-
cisable per
31/12/
2022
SRs
offered &
accepted
during
2022
SRs
exercised
during
2022
SRs
expired
in 2022
Dr. Walid Abi–Saab
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
16/06/2020
18/08/2021
WP 2016.B
06/04/2017
WP 2017
30/08/2017
WP 2018
18/06/2018
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
SR Plan
2022 BE
23/06/2020
18/08/2021
02/09/2022
WP 2017
30/08/2017
WP 2018
18/06/2018
Mr. Michele Manto
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
SR Plan
2022 BE
16/06/2020
02/07/2021
02/09/2022
3rd year after year of
grant 01/01/2022 – 18/04/2026
100%
3rd year after year of
grant 01/01/2023
100%
3rd year after year of
grant 01/01/2024
100%
3rd year after year of
grant 01/01/2025
100%
3rd year after year of
grant 06/04/2020
100%
3rd year after year of
grant 01/01/2021
100%
3rd year after year of
grant 01/01/2022
100%
3rd year after year of
grant 01/01/2023
100%
3rd year after year of
grant 01/01/2024
100%
3rd year after year of
grant 01/01/2025
100%
3rd year after year of
grant 01/01/2026
100%
3rd year after year of
grant 01/01/2021
100%
3rd year after year of
grant 01/01/2022
100%
3rd year after year of
grant 01/01/2023
100%
3rd year after year of
grant 01/01/2024
100%
3rd year after year of
grant 01/01/2025
100%
3rd year after year of
grant 01/01/2026
01/01/2023
– 10/04/2027
01/01/2024
– 17/04/2028
01/01/2025
– 30/04/2029
06/04/2020
– 19/01/2025
01/01/2021
– 16/05/2025
01/01/2022
– 18/04/2026
01/01/2023
– 10/04/2027
01/01/2024
– 17/04/2028
01/01/2025
– 30/04/2029
01/01/2026
– 06/05/2030
01/01/2021
– 16/05/2025
01/01/2022
– 18/04/2026
01/01/2023
– 10/04/2027
01/01/2024
– 17/04/2028
01/01/2025
– 30/04/2029
01/01/2026
– 06/05/2030
€95.11
50,000
€168.42
30,000
€64.76
30,000
€62.50
10,000
10,000
€80.57
45,000
45,000
€79.88
60,000
60,000
€95.11
50,000
€168.42
40,000
€64.76
40,000
€57.46
32,000
32,000
€80.57
60,000
60,000
€79.88
30,000
30,000
€95.11
40,000
€168.42
30,000
€64.76
30,000
€57.46
24,000
24,000
(1) Warrant Plan (WP) and Subscription Right Plan (SR Plan)
(2) Dr. Dan Baker, Dr. Elisabeth Svanberg, Mr. Jérôme Contamine, Mr. Daniel O’Day and Dr. Linda Higgins do not have any subscription rights.
137
Galapagos NV Annual Report 2022
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
CORPORATE GOVERNANCE
At the end of 2022, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) held
1,000,000 subscription rights, Mr. Bart Filius held 25,000 shares and 373,000 subscription
rights, Dr. Walid Abi-Saab held 2,500 shares and 277,000 subscription rights, and
Mr. Michele Manto held 2,020 shares and 214,000 subscription rights.
RSUs offered to, vested or expired for the Executive
Committee members
In 2022, the Executive Committee members were offered new RSUs under 2022 RSU
Annual Long-Term Incentive Plan, except our new CEO who joined per 1 April 2022,
and under the 2022 RSU Retention Plan, subject to acceptance. The members of the
Executive Committee accepted all RSUs offered to them, except for one member. The
grant under the 2022 RSU Annual Long-Term Incentive Plan is the grant equivalent to
the actual bonus for 2021 and this RSU grant will vest in full three years after the offer
date. The grant under the 2022 RSU Retention Plan has a four-year vesting period, with
25% vesting each year and a first vesting date on 1 May 2023. With the exception of the
RSUs offered to and accepted by Stoffels IMC BV (permanently represented by Dr. Paul
Stoffels), the RSUs are not transferable. The table below sets forth the total number of
RSUs offered and accepted by each Executive Committee member during 2022: Stoffels
IMC BV (permanently represented by Dr. Paul Stoffels): 74,408 RSUs, Mr. Bart Filius: 61,442
RSUs, Dr. Walid Abi-Saab: 37,274 RSUs and Mr. Michele Manto: 27,354 RSUs.
The main characteristics of the RSU plans for the Executive Committee 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 Executive Committee 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.
138
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
No RSUs expired during financial year 2022. The table below sets forth the main
characteristics of RSU plans issued to the (former) Executive Committee members in
2019, 2020, 2021 and 2022, the number of RSUs awarded to and accepted by each
(former) Executive Committee member under the respective RSU Plan, and the number
of RSUs vested and paid out to each (former) Executive Committee member during 2022:
Executive Committee member
Plan
Offer date
Vesting period
Vesting date
Number of RSUs
offered and
accepted
RSUs vested
during 2022
Stoffels IMC BV,
permanently represented by
Dr. Paul Stoffels
Plan 2022.II
05/05/2022
25%/year
Four-year vesting period
Plan 2019.I
16/10/2019 100% three years after offer date
Mr. Onno van de Stolpe(1)
Plan 2019.II
16/10/2019
Plan 2019.III
16/10/2019
25%/year
Four-year vesting period
50% two years after offer date
50% three years after offer date
Plan 2020.I
06/05/2020 100% three years after offer date
Plan 2020.II
06/05/2020
25%/year
Four-year vesting period
Plan 2021.I
05/05/2021 100% three years after offer date
Plan 2021.IV
24/09/2021
25%/year
Four-year vesting period
Plan 2019.I
16/10/2019 100% three years after offer date
Plan 2019.II
16/10/2019
Plan 2019.III
16/10/2019
25%/year
Four-year vesting period
50% two years after offer date
50% three years after offer date
Plan 2020.I
06/05/2020 100% three years after offer date
Mr. Bart Filius
Plan 2020.II
06/05/2020
25%/year
Four-year vesting period
Plan 2021.I
05/05/2021 100% three years after offer date
Plan 2021.IV
24/09/2021
25%/year
Four-year vesting period
Plan 2022.I
03/05/2022 100% three years after offer date
Plan 2022.II
05/05/2022
25%/year
Four-year vesting period
01/05/2023
01/05/2024
01/05/2025
01/05/2026
16/10/2022
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
06/05/2023
01/05/2021
01/05/2022
01/05/2023
01/05/2024
05/05/2024
01/05/2022
01/05/2023
01/05/2024
01/05/2025
16/10/2022
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
06/05/2023
01/05/2021
01/05/2022
01/05/2023
01/05/2024
05/05/2024
01/05/2022
01/05/2023
01/05/2024
01/05/2025
03/05/2025
01/05/2023
01/05/2024
01/05/2025
01/05/2026
74,408
15,000
25,606
16,922
2,392
15,925
2,111
15,000
6,401
8,461
3,981
61,719
5,000
15,429
5,000
4,481
8,461
2,787
15,429
17,924
16,922
1,452
11,148
1,011
61,719
3,570
57,872
139
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Executive Committee member
Plan
Offer date
Vesting period
Vesting date
Dr. Andre Hoekema(2)
Plan 2019.I
16/10/2019 100% three years after offer date
Plan 2019.III
16/10/2019
50% two years after offer date
50% three years after offer date
Plan 2020.I
06/05/2020 100% three years after offer date
Plan 2021.IV
24/09/2021
25%/year
Four-year vesting period
Plan 2019.I
16/10/2019 100% three years after offer date
Plan 2019.II
16/10/2019
Plan 2019.III
16/10/2019
25%/year
Four-year vesting period
50% two years after offer date
50% three years after offer date
Plan 2020.I
06/05/2020 100% three years after offer date
Dr. Walid Abi-Saab
Plan 2020.II
06/05/2020
25%/year
Four-year vesting period
Plan 2021.I
05/05/2021 100% three years after offer date
Plan 2021.IV
24/09/2021
25%/year
Four-year vesting period
Plan 2022.I
03/05/2022 100% three years after offer date
Plan 2022.II
05/05/2022
25%/year
Four-year vesting period
Plan 2019.II
16/10/2019
25%/year
Four-year vesting period
Plan 2020.I
06/05/2020 100% three years after offer date
Mr. Michele Manto
Plan 2021.I
05/05/2021 100% three years after offer date
Plan 2020.II
06/05/2020
25%/year
Four-year vesting period
Plan 2021.IV
24/09/2021
25%/year
Four-year vesting period
Plan 2022.I
03/05/2022 100% three years after offer date
Plan 2022.II
05/05/2022
25%/year
Four-year vesting period
16/10/2022
16/10/2021
16/10/2022
06/05/2023
01/05/2022
01/09/2022(3)
01/05/2024
01/05/2025
16/10/2022
01/05/2020
01/05/2021
01/05/2022
01/05/2023
16/10/2021
16/10/2022
06/05/2023
01/05/2021
01/05/2022
01/05/2023
01/05/2024
05/05/2024
01/05/2022
01/05/2023
01/05/2024
01/05/2025
03/05/2025
01/05/2023
01/05/2024
01/05/2025
01/05/2026
01/05/2020
01/05/2021
01/05/2022
01/05/2023
06/05/2023
01/05/2021
01/05/2022
01/05/2023
01/05/2024
05/05/2024
01/05/2022
01/05/2023
01/05/2024
01/05/2025
03/05/2025
01/05/2023
01/05/2024
01/05/2025
01/05/2026
Number of RSUs
offered and
accepted
RSUs vested
during 2022
3,000
16,922
832
3,000
8,461
51,433
5,000
25,716
5,000
4,481
5,077
2,787
10,800
1,280
1,327
7,714
17,924
10,153
932
11,148
835
43,203
2,550
34,724
5,121
612
5,308
835
30,859
2,550
24,804
(1) On the leaver date of Mr. Onno van de Stolpe his unvested RSUs became null and void, being 65,158 RSUs.
(2) On the leaver date of Dr. Andre Hoekema his unvested RSUs became null and void, being 39,407 RSUs.
(3) As previously disclosed, upon substantiated recommendation of the Nomination and Remuneration Committee, the Board of Directors 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) has occured earlier than under the normal
plan rules.
140
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Pursuant to the terms and conditions of the RSU plans all unvested RSUs of Mr. Onno van
de Stolpe and Dr. Andre Hoekema, as set out in the table above, became null and void
on their respective retirement date, being 31 October 2022 and 31 December 2022.
In 2023, as part of the Executive Committee's long-term variable remuneration, a number
of RSUs equivalent to the 2022 short-term cash bonuses (based on the average share
price of the Galapagos share on Euronext Amsterdam during the month of April 2023)
will be granted to the members of the Executive Committee under the 2023 RSU Annual
Long-Term Incentive Plan (i.e. the long-term portion of the bonus for 2022), except to the
retired Chief Executive Officer, Chief Business Officer and Chief Medical Officer.
Evolution of remuneration and company
performance
The below table shows the annual change of remuneration of each Board member,
the (former) CEO and the other Executive Committee members (in aggregate), of the
performance of the Company and of average remuneration on a full-time equivalent
basis of Galapagos’ employees, other than members of the Board of Directors and the
Executive Committee, over the five most recent financial years.
Director’s remuneration(1)
Executive Committee(2) (3)
Stoffels IMC BV, permanently
represented by Dr. Stoffels(4)
Mr. Onno van de Stolpe , CEO(5)
Other Executive Committee
members(6)
Board of Directors(7) (8)
Dr. Rajesh Parekh(9)
Mr. Howard Rowe(10)
Ms. Katrine Bosley(10)
Dr. Mary Kerr
Mr. Peter Guenter(11)
Dr. Elisabeth Svanberg(12)
Mr. Jérôme Contamine
Dr. Dan Baker
Comparative table of remuneration and company performance
2022
% change
2021
% change
2020
% change
2019
% change
2018
€900,000
€1,470,000
€160,524
€160,524
€2,276,838
€8,380,367
N/A
N/A
N/A
N/A
-84%
€996,000
N/A
N/A
31%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
€758,400
-82% €4,322,105
209% €1,398,236
-93% €2,328,250
11% €2,091,784
-73% €7,666,471
242% €2,242,627
2% €2,233,625
27% €1,756,932
-80% €8,980,561
303% €2,227,461
71% €4,893,184
22% €3,995,216
-73% €14,609,054
272% €3,926,476
€99,643
€165,643
€22,500
€38,500
€20,892
€20,892
€65,000
€115,000
€65,000
€115,000
€65,000
€115,000
€68,132
€102,132
€34,066
€68,066
-17%
-25%
-68%
-68%
-68%
-68%
0%
0%
0%
0%
0%
0%
N/A
N/A
N/A
N/A
€120,000
€220,000
€70,000
€120,000
€65,000
€65,000
€65,000
€115,000
€65,000
€115,000
€65,000
€115,000
N/A
N/A
N/A
N/A
0%
0%
-7%
-4%
0%
€120,000
€220,000
€75,000
€125,000
€65,000
-43%
€115,000
0%
0%
0%
0%
47%
47%
N/A
N/A
N/A
N/A
€65,000
€115,000
€65,000
€115,000
€44,164
€77,999
N/A
N/A
N/A
N/A
33%
-62%
36%
-58%
44%
-60%
44%
-60%
117%
-58%
N/A
N/A
N/A
N/A
N/A
N/A
€90,000
€577,950
€55,000
€298,975
€45,000
€288,975
€45,000
€288,975
€30,000
€273,975
N/A
N/A
N/A
N/A
N/A
N/A
0%
€90,000
183%
€204,300
5%
€52,500
173%
€109,650
0%
€45,000
183%
€102,150
3%
€43,750
186%
€100,900
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
141
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Comparative table of remuneration and company performance
2022
% change
2021
% change
2020
% change
2019
% change
2018
Company performance
Financial KPIs (thousand of €, except for the stock price and number of employees)
Operational Cash burn
(-)/operational cash flow
R&D expenditure(13)
Cash position on 31 Dec(14)
# of employees on 31 Dec(15)
Stock price performance (Last
trading day FY)
-513,774
515,083
-9%
5%
-564,840
491,707
4,094,062
-13%
4,703,177
9%
-7%
-9%
-517,400
531,354
5,169,349
1,338
2%
1,309
-12%
1,489
-116%
3,162,804
2097%
-158,379
24%
-11%
48%
427,320
32%
322,875
5,780,832
348%
1,290,796
1,003
38%
725
41.35
-16%
49.22
-39%
80.48
-57%
186.50
132%
80.56
Average remuneration of employees on FTE basis
Employees of the Group(16)
€123,958.47
21% €102,471.00
-2% €104,290.00
4% €100,682.00
4% €97,139.00
(1) The directors’ remuneration overview contains for the CEO, other Executive Committee members and directors 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 the CEO and the other Executive Committee members, being the annual base salary, cash bonus and (if any) exceptional bonus.
(3) The second row shows the total remuneration of the CEO and the other Executive Committee members, 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 2022 the exercise price of the Subscription Right Plan 2022 BE is compared
with the average share price as quoted on Euronext Brussels and Amsterdam during the financial year 2022.
(4) CEO as of 1 April 2022.
(5) CEO until 31 March 2022.
(6) The other Executive Committee members during financial year 2022 are Mr. Bart Filius, Dr. Walid Abi-Saab (until 31 December 2022), Dr. Andre Hoekema (until 31 October 2022) and
Mr. Michele Manto. Their remuneration over the five year period is included under the “Other Executive Committee members”.
(7) The first row shows the total cash remuneration of each member of the Board of Directors, being the board fees.
(8) The second row shows the total remuneration of each member of the Board of Directors, 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 members of the Board of Directors.
(9) Chairman of the Board of Directors until 26 April 2022.
(10) Director until 26 April 2022.
(11) Director as of 30 April 2019.
(12) Director as of 28 April 2020.
(13) 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.
(14) 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.
(15) 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.
(16) 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 2022 year-end process, the actual annual figures for employees had not been finalized by the date of this report. Therefore, 2022 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.
142
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Ratio between the highest and lowest remuneration
The ratio between the highest and lowest remuneration at Galapagos during financial
year 2022 is: 1:37.75.
The ratio is calculated on the basis of the lowest FTE pay per 31 December 2022,
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 2022 year-end
process, the actual annual bonus figures for employees below the Executive Committee
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 2022 actual bonus outcomes.
Minimum share ownership
From the financial year 2020, our remuneration policy has set a minimum threshold of
shares to be held at any time by the Chief Executive Officer to the number of shares
equivalent to one year of the Chief Executive Officer’s annual base salary and by the other
members of the Executive Committee to the number of shares equivalent to six months’
of the relevant Executive Committee member’s annual base salary. Thresholds will be re-
calculated on an annual basis and need to be reached within four years. For our Chief
Executive Officer, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels), we will
calculate and disclose the applicable threshold for the first time in our annual report for
financial year 2023.
Executive Committee member
Stoffels IMC BV, permanently represented by
Dr. Paul Stoffels(4)
Onno van de Stolpe, CEO(5)
Bart Filius, President, CFO & COO
Andre Hoekema, CBO(6)
Walid Abi-Saab, CMO(7)
Michele Manto, CCO
Minimum share
ownership
Objective 2020(1)
Minimum share
ownership
Objective 2021(2)
Minimum share
ownership
Objective 2022(3)
N/A
3,218
1,073
966
1,073
746
N/A
7,753
2,622
2,292
2,584
2,019
N/A
6,461
4,881
3,832
4,294
3,416
(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) The 2022 threshold needs to be reached within four years, i.e. 1 January 2026.
(4) CEO as of 1 April 2022.
(5) CEO until 31 March 2022.
(6) Member of the Executive Committee until 31 October 2022.
(7) Member of the Executive Committee until 31 December 2022.
143
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Severance clauses and payments
Severance payments for departing members of the
Executive Committee
On 30 August 2021, Galapagos announced the planned retirement of its Chief Executive
Officer Onno van de Stolpe and after a transition period Stoffels IMC BV, permanently
represented by Dr. Paul Stoffels, took over as Chief Executive Officer effective 1 April 2022.
The retirement package of our former Chief Executive Officer, Onno van de Stolpe, has
been disclosed in the annual report for financial year 2021.
In 2022, Dr. Andre Hoekema retired from Galapagos per 31 December 2022 and as of
31 October 2022 he was no longer a member of the Executive Committee. He executed
an advisory role until 31 December 2022, for which he continued to receive his base
salary. He qualifies as a good leaver under the terms and conditions of the subscription
right plans given his retirement.
For the avoidance of doubt, Dr. Hoekema will not receive a grant under the 2023 RSU
Annual Long-Term Incentive Plan equivalent to his 2022 short-term cash bonus.
Effective 1 January 2023, Dr. Walid Abi-Saab is no longer a member of our Executive
Committee. He will execute a purely advisory role until 31 May 2023, for which he will
continue to receive a his 2022 base salary and retains entitlement to RSU pay-outs until
the aforementioned date.
For the avoidance of doubt, Dr. Walid Abi-Saab will not receive a grant under the 2023
RSU Annual Long-Term Incentive Plan equivalent to his 2022 short-term cash bonus. He
will qualify as a good leaver under the terms and conditions of the subscription right
plans, pursuant to an exception granted by the Board of Directors under the relevant
subscription right plans.
Claw-back right of Galapagos relating to variable
remuneration
As from financial year 2020, contractual provisions apply to each member of the
Executive Committee to ensure that Galapagos has the right to have each Executive
Committee member forfeit any unvested RSUs, deferred portions of previous cash
bonuses or unvested subscription rights (i) in the event of a restatement of the financial
statements that has a material negative effect on Galapagos or (ii) a material breach of
our Code of Conduct and Ethics.
During the financial year 2022 no claw-back events occurred.
The 2022 RSU plans and 2022 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. On the leaver date of Mr.
Onno van de Stolpe and Dr. Andre Hoekema, their outstanding RSUs under several RSU
plans became null and void, respectively, being 65,158 RSUs and 39,407 RSUs.
144
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Deviations from the remuneration policy
Galapagos’ remuneration policy sets out that the Board of Directors 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 Remuneration
Committee, which will provide a substantiated recommendation to the Board of
Directors. No deviations are disclosed in this remuneration report.
Conflict of interests and related parties
We consider that Gilead became a related party of Galapagos NV in 2019 because of
(i) Gilead’s then 25.84% shareholding (25.38% on 31 December 2022) in Galapagos NV,
and (ii) the fact that Gilead is entitled to propose two candidates to be appointed to
our Board of Directors under the share subscription agreement dated 14 July 2019, as
amended.
On 4 March 2022, 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 responsibility for the MANTA study, a safety study
in men with moderately to severely active UC and CD to assess semen parameters
while taking filgotinib, and its long-term extension study, from Gilead to us. The (former)
Supervisory Board (currently Board of Directors) resolved and confirmed, as far as
needed, that the related party transaction approval mechanism as set forth in article
7:116 of the Belgian Companies Code did not have to be applied, since the value of the
aforementioned related party transaction is less than 1% of the Company’s consolidated
net equity (based on the consolidated financial statements of Galapagos NV for the
financial year ended on 31 December 2021) and since Galapagos NV is therefore able
to rely on the materiality exemption as set out in article 7:116, § 1, 2° of the Belgian
Companies Code. Furthermore, we entered into some mainly technical and non-
material amendments to the existing transactions with Gilead during 2022. A more
detailed explanation of some of our transactions with Gilead 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 member of the Board of Directors has a conflict of
interests within the meaning of article 7:96 of the Belgian Companies Code, such Board
member shall notify the Board of Directors in advance of the respective conflict, and will
act in accordance with the relevant rules as set out in the Belgian Companies Code (i.e.
article 7:96 of the Belgian Companies Code).
Pursuant to our Corporate Governance Charter, if a member of the Executive Committee
has a direct or indirect interest of a monetary nature that conflicts with the interests
of the Company in respect of a decision or an act falling within the scope of the
responsibilities of the Executive Committee, the Executive Committee shall refrain from
making any decision. The Executive Committee shall instead escalate the matter to the
Board of Directors. The Board of Directors shall decide whether or not to approve such
decision or act, and shall apply the conflict of interests procedure set out in article
145
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
7:96 of the Belgian Companies Code. In the event a conflict of interests exists within
the Executive Committee that falls outside of the scope of article 7:96 of the Belgian
Companies Code, the existence of such conflict shall be reported by the relevant
Executive Committee member, its existence shall be included in the minutes (but shall
not be published) and the relevant Executive Committee member shall not vote on the
matter.
In addition, the Company's Corporate Governance Charter and Galapagos’ Related
transactions between
Person Transaction Policy contain certain procedures for
Galapagos NV (including its affiliated and associated companies within the meaning
of articles 1:20 and 1:21 of the Belgian Companies Code) and its Board or Executive
Committee members, major shareholders, or any of their immediate family members
and affiliates. Without prejudice to the procedure as set out in article 7:96 of the Belgian
Companies Code, these policies provide that all transactions between Galapagos NV
(including its affiliated and associated companies within the meaning of articles 1:20 and
1:21 of the Belgian Companies Code) and its Board or Executive Committee members,
need the approval of the Audit Committee and the Board of Directors, which approval
can only be provided for transactions at arm’s length. Moreover, conflicts of interests,
even if they are not a conflict of interests within the meaning of article 7:96 of the
Belgian Companies Code, are enacted in the Board of Directors' meeting minutes, and
the relevant Board member cannot participate in the deliberation or voting on the
concerned item on the agenda.
In 2022, the following conflict of interests between Galapagos NV and a director within
the meaning of article 7:96 of the Belgian Companies Code was noted:
In a meeting of the Board of Directors held on 21 June 2022, the following was
reported in accordance with article 7:96 of the Belgian Companies Code in
connection with the proposed amendment of the management agreement between
Galapagos NV and Stoffels IMC BV: the Chairman, being a party to the management
agreement (as CEO), declared having a conflict of interests concerning the proposed
amendment. The Chairmain subsequently left the meeting before the deliberation
and the vote concerning this point on the agenda took place. The Board considered
that said amendment is limited in scope and cost neutral for the Company: the
reimbursement by the Company of Stoffels IMC BV’s expenses for travel was reduced,
and it was clarified that Stoffels IMC BV will bear all costs related to commuting travel.
This was proposed to be compensated by an increase of its fixed fee with €50,000 on
a yearly basis. As such, the Board considered that said amendment is justified and
will have no material impact on the financial position of the Company.
146
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Code of Business Conduct and Ethics
Since 2021, we have established a Code of Business Conduct and Ethics to ensure that
our members of the Board of Directors, Executive Committee members and employees
are making ethical and legal decisions when conducting Galapagos’ business and
performing their day-to-day duties. We expect our members of the Board of Directors,
members of the Executive Committee and employees to conduct business with integrity,
ethics and respect for human rights. We expect them to turn away from conflicts of
interests, corruption and fraud. To this end, we give trainings on this Code to our
employees, including our subsidiaries’ employees. So far, since the launch of our Code
of Business Conduct and Ethics, 97.1% of our employees has completed the training.
Our Code of Business Conduct and Ethics is available at our website (www.glpg.com).
At the beginning of 2023, we made some updates to our Code of Business Conduct and
Ethics to ensure that it continues to reflect who we are as an organization, including, but
not limited to, (a) an explicit applicability of our Code of Business Conduct and Ethics to
our suppliers and business partners, and (b) an overview of some of the work done in the
past year in the field of ESG.
One breach of our Code of Business Conduct and Ethics was reported to the Audit
Committee in 2022.
147
Galapagos NV Annual Report 2022
CORPORATE GOVERNANCE
Statement by the Board of Directors
The Board of Directors of Galapagos NV, represented by all its members, declares that,
as far as it is aware, the non-consolidated and consolidated financial statements, both
prepared in conformity with the applicable standards for financial statements, give a true
and fair view of the equity, financial position, and the results of Galapagos NV and the
companies included in the consolidation as of 31 December 2022.
The Board of Directors of Galapagos NV, represented by all its members, further declares
that, as far as it is aware, this annual report related to the financial year ended on 31
December 2022, gives a true and fair view of the development, results, and position of
Galapagos NV and the companies included in the consolidation, as well a description of
the most important risks and uncertainties with which Galapagos NV and the companies
included in the consolidation are confronted.
The Board of Directors of Galapagos NV will submit proposed resolutions to its
shareholders at its annual Shareholders' Meeting (to be held on 25 April 2023) to approve
the non-consolidated annual accounts of the Company for the financial year ended on
31 December 2022 (including the allocation of the annual result as proposed by the
Board of Directors), and to release from liability, by separate vote, the members of the
Board of Directors, the members of the former Supervisory Board, and the statutory
auditor for the performance of their respective mandates during the financial year ended
on 31 December 2022.
Mechelen, 21 March 2023
On behalf of the Board of Directors
Jérôme Contamine
Chairman of the Audit Committee and member of the Board of Directors
Stoffels IMC BV
permanently represented by Dr. Paul Stoffels
Chairman of the Board of Directors
148
Galapagos NV Annual Report 2022
Financial
statements
2022 consolidated and non-consolidated
financial statements
Forward with Purpose
FINANCIAL STATEMENTS
Consolidated financial statements
Consolidated statements of income and
comprehensive income/loss (-)
Consolidated income statement
Year ended 31 December
(thousands of €, except per share data)
Product net sales
Collaboration revenues
Total net revenues
Cost of sales
Research and development expenditure
Sales and marketing expenses
General and administrative expenses
Other operating income
Operating loss
Fair value adjustments and net currency exchange differences
Other financial income
Other financial expenses
Loss before tax
Income taxes
2022
87,599
417,681
505,280
(12,079)
(515,083)
(147,555)
(144,931)
46,848
2021
Notes
14,753
470,093
484,846
(1,629)
(491,707)
(69,956)
(140,899)
53,749
6
6
7
7
7
7
9
9
9
(267,520)
(165,596)
51,473
18,578
(17,679)
61,296
3,058
(21,757)
(215,147)
(122,999)
(2,844)
(2,423)
10
Net loss from continuing operations
(217,991)
(125,422)
Net profit from discontinued operations, net of tax
-
22,191
27
Net loss
(217,991)
(103,231)
Net loss attributable to:
Owners of the parent
Basic and diluted loss per share
Basic and diluted loss per share from continuing operations
(217,991)
(3.32)
(3.32)
(103,231)
(1.58)
(1.91)
11
The accompanying notes form an integral part of these financial statements.
150
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income / loss (-)
(thousands of €)
Net loss
Items that will not be reclassified subsequently to profit or loss:
Re-measurement of defined benefit obligation
Items that may be reclassified subsequently to profit or loss:
Translation differences, arisen from translating foreign activities
Realization of translation differences upon sale of
foreign operations
Other comprehensive income, net of income tax
Total comprehensive loss attributable to:
Owners of the parent
Total comprehensive loss attributable to owners of the parent
arises from:
Continuing operations
Discontinued operations
Total comprehensive loss
Year ended 31 December
2022
2021
Notes
(217,991)
(103,231)
5,324
129
-
5,453
730
736
731
2,197
(212,538)
(101,034)
(212,538)
-
(212,538)
(123,956)
22,922
(101,034)
The accompanying notes form an integral part of these financial statements.
151
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Consolidated statements of financial position
(thousands of €)
Assets
Goodwill
Intangible assets other than goodwill
Property, plant and equipment
Deferred tax assets
Non-current R&D incentives receivables
Other non-current assets
Non-current assets
Inventories
Trade and other receivables
Current R&D incentives receivables
Current financial investments
Cash and cash equivalents
Other current assets
Current assets
Total assets
Equity and liabilities
Share capital
Share premium account
Other reserves
Translation differences
Accumulated losses
Total equity
Retirement benefit liabilities
Deferred tax liabilities
Non-current lease liabilities
Other non-current liabilities
Non-current deferred income
Non-current liabilities
Current lease liabilities
Trade and other liabilities
Current tax payable
Current deferred income
Current liabilities
Total liabilities
Total equity and liabilities
31 December
2022
2021
Notes
69,813
146,354
154,252
1,363
119,941
5,778
497,501
52,925
40,429
26,126
3,585,945
508,117
23,307
4,236,850
-
60,103
137,512
4,032
127,186
2,473
331,306
20,569
111,337
16,827
2,469,809
2,233,368
9,945
4,861,854
4,734,351
5,193,160
293,604
2,735,557
(4,853)
(1,593)
(496,689)
2,526,026
5,540
20,148
14,692
21,808
1,623,599
1,685,787
7,209
148,675
1,022
365,631
522,538
292,075
2,730,391
(10,177)
(1,722)
(367,205)
2,643,362
11,699
-
19,655
7,135
1,944,836
1,983,325
7,204
137,622
1,782
419,866
566,474
2,208,325
4,734,351
2,549,798
5,193,160
12
13
14
22
16
15
17
18
16
19
20
18
21
21
22
23
24
25
23
24
10
25
The accompanying notes form an integral part of these financial statements.
152
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Consolidated cash flow statements
(thousands of €)
Net loss of the year
2022
2021
Notes
(217,991)
(103,231)
Adjustment for non-cash transactions
Adjustment for items to disclose separately under operating cash
flow
Adjustment for items to disclose under investing and financing
cash flows
Change in working capital other than deferred income
Cash used for other liabilities related to the acquisition of
subsidiaries
Decrease in deferred income
Cash used in operations
Interest paid
Interest received
Corporate taxes paid
117,296
(4,533)
(3,789)
32,313
(28,164)
(383,618)
57,718
11,227
(28,847)
23,337
-
(453,720)
(488,487)
(493,516)
(12,463)
4,839
(4,433)
(12,540)
2,913
(684)
Net cash flow used in operating activities
(500,544)
(503,827)
Purchase of property, plant and equipment
Purchase of and expenditure in intangible fixed assets
Proceeds from disposal of property, plant and equipment
Purchase of current financial investments
Interest received related to current financial investments
Sale of current financial investments
Cash in from disposals of subsidiaries, net of cash disposed of
Cash out from acquisition of subsidiaries, net of cash acquired
Cash advances and loans to third parties
Proceeds from sale of financial assets held at fair value through
profit or loss
(27,389)
(9,558)
739
(2,728,634)
2,996
1,641,602
-
(115,270)
(10,000)
(54,205)
(3,674)
-
(1,561,015)
12
2,127,380
28,696
-
-
-
4,045
Net cash flow generated from/used in (-) investing activities
(1,245,514)
541,238
Payment of lease liabilities
Proceeds from capital and share premium increases from
exercise of subscription rights
Net cash flow used in financing activities
(8,182)
6,695
(1,487)
Increase/decrease (-) in cash and cash equivalents
(1,747,545)
(7,190)
3,314
(3,876)
33,535
28
28
28
28
26
25
14
13
14
19
19
19
27
26
26
15
23
21
153
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
(thousands of €)
2022
2021
Notes
Cash and cash equivalents at beginning of year
2,233,368
2,143,071
20
Increase/decrease (-) in cash and cash equivalents
(1,747,545)
Effect of exchange rate differences on cash and cash equivalents
22,293
33,535
56,763
Cash and cash equivalents at end of the year
508,117
2,233,368
20
(thousands of €)
Current financial investments
Cash and cash equivalents
Current financial investments and cash and cash equivalents
31 December
2022
3,585,945
508,117
4,094,062
2021
Notes
2,469,809
2,233,368
4,703,177
19
20
The accompanying notes form an integral part of these financial statements.
154
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Consolidated statements of changes in equity
(thousands of €)
Share capital
Share
premium
account
Translation
differences
Other
reserves
On 1 January 2021
Net loss
Other comprehensive income
Total comprehensive income/
loss (-)
Share-based compensation
Exercise of subscription rights
On 31 December 2021
On 1 January 2022
Net loss
Other comprehensive income
Total comprehensive income/
loss (-)
Share-based compensation
Exercise of subscription rights
On 31 December 2022
Accumul.
losses
(334,701)
(103,231)
(103,231)
70,726
291,312
2,727,840
(3,189)
(10,907)
1,467
1,467
730
730
763
292,075
2,551
2,730,391
(1,722)
(10,177)
(367,205)
292,075
2,730,391
(1,722)
(10,177)
129
129
5,324
5,324
(367,205)
(217,991)
(217,991)
88,506
1,530
293,604
5,166
2,735,557
(1,593)
(4,853)
(496,689)
Total
2,670,355
(103,231)
2,197
(101,034)
70,726
3,313
2,643,362
2,643,362
(217,991)
5,453
(212,538)
88,506
6,695
2,526,026
The accompanying notes form an integral part of these financial statements.
155
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 a fully integrated biotechnology company focused on discovering, developing,
and commercializing innovative medicines. We are committed to improving patients’
lives worldwide by targeting diseases with high unmet needs. Our research and
including small
development
molecules and cell
therapies. Our portfolio comprises discovery through to
commercialized programs in immunology, oncology and other indications. Our first
medicine for rheumatoid arthritis and ulcerative colitis is on the market in Europe and
Japan.
(R&D) capabilities cover multiple drug modalities,
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., Galapagos Real Estate
Netherlands B.V. and CellPoint B.V. (CellPoint)(Oegstgeest, the Netherlands); Galapagos,
Inc. and its subsidiaries Xenometrix,
Inc. (AboundBio)(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).
Inc. and AboundBio,
Our operations had 1,338 employees on 31 December 2022 (as compared to 1,309
employees on 31 December 2021) mainly working in our operating facilities in Mechelen
(the Belgian headquarters), the Netherlands, France, Switzerland, Germany, Italy, Spain
and the United Kingdom.
We are currently operating as a single operating segment. Prior to the disposal of our
Croatian subsidiary Fidelta d.o.o. (Fidelta) we had two reportable segments: our (i) R&D
and (ii) fee-for-service business. On 4 January 2021 however we sold Fidelta to Selvita
S.A. (Selvita), who acquired 100% of the outstanding shares in Fidelta. Due to the disposal
156
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
of Fidelta (our fee-for-service segment), we have reported this segment as discontinued
operations.
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.
Conflict in Ukraine
To date, we have experienced very limited impact of the armed conflict between Russia
and Ukraine. However, we keep on monitoring the impact of the situation.
2. Summary of significant transactions
GILEAD COLLABORATION AGREEMENT
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
Sareholders 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
2021 and 31 December 2022. On 31 December 2022 the value of the subsequent Warrant
B decreased to €0.7 million, driven by the decrease of our share price, and of the implied
volatility in 2022.
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
157
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 Board of Directors of
Galapagos (Daniel O’Day and Linda Higgins).
In Q4 2020, Gilead decided not to pursue FDA approval of the RA indication for filgotinib
in the U.S. as the result of a 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 DIVERSITY clinical study, evaluating
filgotinib in CD, and its long-term extension study. The DIVERSITY clinical study was
transferred and as of 1 April 2022, we were 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.
158
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
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
legal,
is subject
to applicable local
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
regulatory and consultation
requirements. All activities have been as of 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 continued 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 were transferred 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 connection with the amendments to the existing arrangement for the
commercialization and development of filgotinib, Gilead paid us €160 million, which
is split between a €110 million payment received in 2021 and a €50 million payment
received in 2022 and is subject to certain adjustments for higher than budgeted
development costs. In 2022, Gilead made a one-time payment of $15 million to us in
consideration for assuming responsibility for the DIVERSITY clinical study. In addition, we
159
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
will no longer be eligible to receive any future milestone payments relating to filgotinib
in Europe. In 2022, we also received from Gilead $20 million of milestone payment for
the regulatory approval of filgotinib in UC in Japan. Other terms of the original license
agreement remain in effect, including the remaining $275 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).
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. Gilead’s ownership amounted to 25.38% at 31 December 2022.
BUSINESS COMBINATIONS
On 21 June 2022 we acquired, in an all-cash transaction, 100% of the shares and voting
interests of CellPoint. On the same date we acquired all of the outstanding capital and
voting interests of AboundBio.
We refer to note 12 Goodwill and impairment of goodwill and note 26 Business
combinations during the period, for more information.
160
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 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.
New standards and interpretations applicable for the annual
period beginning on 1 January 2022
New standards and interpretations applicable for the annual period beginning on
1 January 2022 did not have a material impact on our consolidated financial statements.
Standards and interpretations published, but not yet
applicable for the annual period beginning on 1 January
2022
A number of new standards are effective for annual periods beginning on or after
1 January 2023 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 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.
The following amendments are effective for the period beginning 1 January 2024:
Liability in a Sale and Leaseback (Amendment to IFRS 16);
Classification of liabilities as current or non-current (Amendment to IAS 1); and
Non-current liabilities with covenants (Amendment to IAS 1).
161
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Consolidated reporting
The consolidated financial statements comprise the financial statements of Galapagos
NV and entities controlled by Galapagos NV (subsidiaries). 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 intra-group transactions, balances, income and expenses are
eliminated when preparing the consolidated financial statements.
financial position, the acquiree’s identifiable assets,
Business combinations
Business combinations are accounted for using the acquisition method. In the statement
of
liabilities and contingent
liabilities are initially recognized at their fair value at the acquisition date. The results
of acquired operations are included in our consolidated income statement from the
date on which control is obtained. Any contingent consideration to be transferred by
us is recognized at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration, which is deemed to be an asset or liability, will
be recognized in profit or loss. The excess of the fair value of the total purchase
consideration transferred over the fair value of the acquired assets and assumed
liabilities is recognized as goodwill. The valuations in support of
fair value
determinations are based on information available at the acquisition date. Acquisition
related costs are expensed as incurred.
Contingent amounts payable or paid by us to former shareholders of acquired
companies, who continue to be employed by us, but which would be automatically
forfeited (or become repayable) upon termination of employment before a specific date,
are classified as remuneration for post-combination services on the appropriate line
in our consolidated income statement. These cash-settled contingent amounts are
recognized in accordance with IAS 19 and are recorded on the balance sheet on the
lines “other (non-) current assets” and “other non-current/trade and other liabilities”
depending on the timing of the payment by us.
Goodwill
Goodwill
is initially measured as the excess of the total purchase consideration
transferred and the fair value of
the acquired assets and assumed liabilities.
Subsequently, goodwill is stated at cost less impairment and tested for impairment at
least annually at the level of the cash generating unit to which it was allocated. Any
impairment costs are recorded in our consolidated income statement on the line “Other
operating income/expense”.
162
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Intangible assets other than goodwill
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
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, rights, technology and in-process research and development
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 launched.
Amortization will
is approved for
commence when the underlying asset
commercialization and the asset will be amortized over its useful life.
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
163
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
option is capitalized as intangible asset and amortized over the expected duration of the
option.
Exclusivity contracts and technology acquired through business combinations are
valued independently as part of the fair value of the businesses acquired and are
amortized over their estimated useful lives. The estimated useful life is based on the
lower of the contract life or the economic useful life.
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.
(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.
164
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
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 extension options (or periods after termination options) in the lease
term if the lease is 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.
165
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
These inventories are initially recognized at cost, and subsequently at the lower of cost
and net realizable value. Cost comprises all costs of purchase, conversion costs and
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 2022.
(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.
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.
166
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
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
167
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 to 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 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 liabilities are initially measured either at fair value or at their transaction price.
Subsequent to initial recognition, financial liabilities are measured at amortized cost.
Financial
consideration liabilities.
liabilities mainly comprise trade and other
liabilities and contingent
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 expenses related to
our research and development project costs.
We derecognize a financial liability when our contractual obligations are discharged,
cancelled or expire.
Contingent consideration liabilities
Any contingent consideration to be transferred by us in relation to businesses acquired
are linked to milestone payments and are initially recognized at fair value as a financial
liability. They are adjusted for the probability of their likelihood of payment and are
appropriately discounted to reflect the impact of time.
Changes in the fair value of these contingent consideration liabilities in subsequent
periods are recognized in our consolidated income statement on the line “other
operating income/expense”. The effect of unwinding the discount over time is
recognized in other financial results.
(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.
168
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 the primary economic environment in which the entity operates. The
consolidated financial statements are presented in Euros, which is our presentation
currency.
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.
169
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 the sales of Jyseleca® in Europe, which are reported as
“Product net sales” in our consolidated income statement.
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:
170
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Collaboration revenues
(i) identify the contract
In our 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.
(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 (which is generally only when the milestone is
achieved). 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
171
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 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) to
measure the progress of the satisfaction of the underlying performance obligation
(which is the applied method for the filgotinib 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 (which is the applied method for the
performance obligation related to our drug discovery platform).
172
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
173
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
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
174
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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) Bonus plans
The members of the Executive Committee, together with other senior managers and the
staff are eligible to receive a bonus based on achievement of personal and corporate
objectives. This bonus is paid in cash.
We recognize an expense in the income statement for all these bonus plans.
Share-based payments
(i) Equity-settled share-based payments
We grant equity-settled incentives to certain employees, members of the Executive
Committee 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.
(ii) Long-term incentive plans in RSUs (Restricted Stock Units)
Members of the Executive Committee 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.
175
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 other than goodwill
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.
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.
(iii) Goodwill
As goodwill is considered to have an indefinite life, it is tested for impairment annually,
and whenever there is an indication that it may be impaired, by comparing its carrying
amount with its recoverable amount (i.e. the higher of value in use and fair value less
costs to sell). If the recoverable amount of the cash-generating unit is less than the
carrying amount of the unit, the impairment loss is allocated first to reduce the carrying
amount of any goodwill allocated to the unit and then to the other assets of the unit pro
rata on the basis of the carrying amount of each asset in the unit. Impairment losses on
goodwill are not reversed.
176
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 in 2021 our reportable segments were R&D and fee-for-
service business. Fidelta is reported as discontinued operations for the year ended 31
December 2021.
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.
On 4 January 2021 we sold of our fee-for-service business Fidelta.
177
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
178
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 2022.
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 2022 amounted to
€174.4 million. Our total deferred income balance related to this filgotinib performance
obligation amounts to €456.4 million on 31 December 2022. 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
2022 of €15.4 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 2022 of €16.0 million and a corresponding decrease in current
and non-current deferred income.
Goodwill impairment
Determining whether goodwill is subject to impairment requires an estimate of the
recoverable amount of the cash-generating unit to which the goodwill has been
allocated. The calculation of this recoverable amount includes forecasts of future cash
flows of the cash-generating unit (highly dependent upon the probability of success
linked to the progress of our clinical programs) and an appropriate discount rate is
required to calculate present values, a process which involves estimates. These
179
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
estimates are constantly monitored, and an impairment test will be performed as soon
as there is an impairment indicator and at least annually. The carrying value of goodwill
at 31 December 2022 is €69.8 million.
Contingent consideration
The contingent consideration included in the consideration payable for the acquisition
of CellPoint was recorded at fair value at the date of acquisition. These fair values were
mainly based on our best estimate of probabilities of reaching the underlying milestones
and by applying an appropriate discount rate. The fair values are reviewed at each
reporting date and any changes are reflected in our consolidated income statement. We
refer to the specific note on contingent consideration for more details.
180
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
5. Segment information
Geographical information
We are currently operating as a single operating segment. Prior to the disposal of Fidelta
in 2021 we had two reportable segments: R&D and fee-for-service business.
In 2022 our operations were mainly located in Belgium, France, the Netherlands,
Germany, Italy, Spain, Switzerland and the United Kingdom. The revenues from our
collaboration partner Gilead represented 82% of our total net revenues in 2022
(97% in 2021).
In 2022 we reported €87.6 million of product net sales for Jyseleca® in Europe
(€14.8 million in 2021) of which €7.3 million realized in Belgium (€1.7 million in 2021).
Following table summarizes our collaboration revenues by destination of customer:
(thousands of €)
United States of America
Europe
Total collaboration revenues
Year ended 31 December
2022
414,129
3,552
417,681
2021
467,978
2,114
470,093
Following table summarizes our collaboration revenues by major customers:
Gilead
United States of America
Europe
Total collaboration revenues from
major customers
Year ended 31 December
2022
2021
(thousands of €)
%
(thousands of €)
%
414,129
1,452
100%
0%
467,978
2,071
100%
0%
415,581
99%
470,049
100%
On 31 December 2022, we held €370.4 million (€197.6 million in 2021) of property, plant
and equipment, intangible assets and goodwill distributed as follows:
(thousands of €)
Belgium
France
The Netherlands
Switzerland
Spain
United States of America
Other
Total
31 December
2022
72,087
20,397
255,461
4,962
3,037
12,729
1,747
370,420
2021
98,295
21,051
66,621
7,181
3,029
136
1,302
197,615
181
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
6. Total net revenues
Product net sales
We reported product net sales of Jyseleca® for the year ended 31 December 2022 of
€87.6 million, as compared to €14.8 million for the year ended 31 December 2021. Our
counterparties for the sales of Jyseleca® during 2022 were mainly hospitals and
wholesalers located across Europe. Jyseleca net sales have significantly grown driven by
volume uptake of existing business and by new launches in both indications in multiple
countries.
Net sales exclusively consisted of sales of Jyseleca® in Europe.
Cost of sales related to Jyseleca® net sales for the year ended 31 December 2022
amounted to €12.1 million, compared to €1.6 million for
the year ended
31 December 2021.
Collaboration revenues
The following table summarizes our collaboration revenues for the years ended
31 December 2022 and 2021 by collaboration and by category of revenue: upfront
payments and license fees, milestone payments, reimbursement income and royalties.
(thousands of €)
Over time
Point in time
2022
2021
Year ended 31 December
Recognition of non-refundable upfront
payments and license fees
Gilead collaboration agreement for filgotinib
Gilead collaboration agreement for drug
discovery platform
Milestone payments
Gilead collaboration agreement for filgotinib
Sobi distribution agreement for Jyseleca
Reimbursement income
Novartis collaboration agreement for MOR106
Royalties
Gilead royalties on Jyseleca
Other royalties
370,078
139,655
433,884
203,301
230,423
230,582
36,777
34,777
2,000
56
56
10,770
10,726
44
32,408
32,408
-
-
-
3,801
3,757
43
Total collaboration revenues
417,681
470,093
182
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Revenue recognition of non-refundable upfront payments, license fees and milestone
payments related to the filgotinib agreement amounted to €174.4 million in 2022. We
recognize the consideration from Gilead allocated to the drug discovery platform on
a linear basis over the 10-year period of our collaboration, of which we recognized
€230.4 million in 2022. For the year ended 31 December 2022 we also recognized in
revenue €10.7 million of royalties from Gilead on filgotinib.
Additionally, we recorded in 2022 milestone payments of €2.0 million triggered by the
initial sales of Jyseleca® in the Czech Republic and Portugal by our distribution and
commercialization partner Sobi.
The below table summarizes the transaction price of our collaboration with Gilead:
(thousands of €)
Upfront consideration
Milestones achieved
Royalties
Impact initial valuation of share subscription agreement
31 December 2021
Other movements
in 2022
31 December 2022
4,018,016
194,363
19,984
124,604
18,238
10,726
4,018,016
212,601
30,710
124,604
4,356,967
28,964
4,385,931
Less:
Warrant issuance liabilities
Warrant A
Initial warrant B
Subsequent warrant B
Allocation to performance obligations
Ziritaxestat
Filgotinib(1)
Drug discovery platform (10 years)
(43,311)
(2,545)
(2,442)
4,308,669
666,967
1,343,214
2,298,489
(43,311)
(2,545)
(728)
4,339,347
666,967
1,372,178
2,300,203
1,714
30,678
28,964
1,714
(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, to €57.3 million on 31 December 2021 and to €58.7 million on 31 December 2022.
In 2022 we received $20.0 million (€18.2 million) of milestone payments for the regulatory
approval of filgotinib in UC in Japan and recognized €10.7 million of royalties from
Gilead.
A summary of our main contracts with customers and distribution/commercialization
partners is given below:
Collaboration with Gilead
We refer to note 2 of this financial report for a general description of our collaboration
with Gilead.
183
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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).
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.
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
the
delivered. Milestone payments are included in the transaction price of
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 2021 and 2022 we
reported respectively €3.8 million and €10.7 million of revenues from royalties from
Gilead.
184
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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.
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 2022.
Collaboration with Sobi
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.
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 2022 and 2021.
(thousands of €)
Personnel costs
Subcontracting
Disposables and lab fees and premises costs
Depreciation and impairment
Professional fees
Other operating expenses
Year ended 31 December
2022
(190,085)
(214,906)
(21,356)
(54,462)
(15,167)
(19,107)
2021
(165,239)
(251,085)
(24,025)
(17,518)
(15,862)
(17,978)
Total research and development expenditure
(515,083)
(491,707)
185
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
The variance in our R&D expenditure in 2022 compared to 2021 was principally due to
the following elements:
Depreciation and impairment costs in 2022 amounted to €54.5 million (€17.5 million
in 2021). This increase was primarily due to an impairment of €26.7 million of
previously capitalized upfront fees related to our collaboration with Molecure on
the dual chitinase inhibitor OATD-01 (GLPG4716) in fibrosis and impairments of
intangible assets related to other discontinued projects recorded in 2022 for an
amount of €8.9 million.
Personnel costs increased from €165.2 million in 2021 to €190.1 million in 2022
primarily explained by increases in restructuring costs and accelerated non-cash cost
recognition for subscription right plans related to good leavers.
Subcontracting costs decreased from €251.1 million in 2021 to €214.9 million in 2022
following the evolution of our programs.
The table below summarizes our research and development expenditure for the years
ended 31 December 2022 and 2021, broken down by program:
(thousands of €)
Filgotinib program
Ziritaxestat program
SIKi program
TYK2 program on GLPG3667
CAR-T programs in oncology
Other programs
Total research and development expenditure
Year ended 31 December
2022
2021
(245,286)
(171,204)
(1,096)
(47,727)
(24,467)
(29,999)
(166,507)
(515,083)
(26,725)
(91,957)
(27,141)
-
(174,680)
(491,707)
The increase in R&D expenditure in 2022 was primarily explained by cost increases for
our filgotinib program and new investments in 2022 in CAR-T programs in oncology.
This was partly offset by cost decreases due to the winding down of the ziritaxestat (IPF)
program and reduced spend on our SIKi, TYK2 and other programs.
186
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Sales and marketing expenses
The following table summarizes the sales and marketing expenses for the years ended
31 December 2022 and 2021.
(thousands of €)
Personnel costs
Depreciation
External outsourcing costs
Sales and marketing expenses recharged to Gilead
Professional fees
Other operating expenses
Year ended 31 December
2022
(71,878)
(2,473)
(54,057)
31
(4,222)
(14,956)
2021
(59,102)
(504)
(62,321)
59,699
(532)
(7,196)
Total sales and marketing expenses
(147,555)
(69,956)
Major part of the increase in our sales and marketing expenses in 2022 is due to the
termination of our 50/50 filgotinib co-commercialization cost sharing agreement with
Gilead as from 1 January 2022 explaining €59.7 million of the variance. Personnel costs
increased by €12.8 million in 2022 compared to 2021, explained by an increase in salaries
and benefits following the growth of the commercial work force from 248 average FTEs in
2021 to 305 average FTEs in 2022 driven by the commercial launch of filgotinib in Europe.
Other operating expenses increased from €7.2 million in 2021 to €15.0 million in 2022
largely due to increased travel expenses.
External outsourcing costs decreased by €8.3 million primarily explained by lower costs
for marketing studies and materials.
General and administrative expenses
The following table summarizes the general and administrative expenses for the years
ended 31 December 2022 and 2021.
(thousands of €)
Personnel costs
Depreciation and impairment
Legal and professional fees
Other operating expenses
Year ended 31 December
2022
(85,034)
(8,631)
(24,368)
(26,898)
2021
(71,190)
(16,621)
(26,072)
(27,016)
Total general and administrative expenses
(144,931)
(140,899)
The increase in our general and administrative expenses in 2022 was mainly explained
by an increase in personnel expenses primarily due to accelerated non-cash cost
recognition for our subscription right plans related to good leavers, and higher
restructuring costs. This was partly offset by a decrease in depreciation and impairment
187
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
costs largely due to an impairment cost in 2021 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).
Other operating income
The following table summarizes other operating income for
31 December 2022 and 2021.
the years ended
(thousands of €)
Grant income
R&D incentives
Other
Total other operating income
Year ended 31 December
2022
1,873
38,527
6,448
46,848
2021
7,334
44,888
1,526
53,749
The grant income in 2022 and 2021 were 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 also included a grant of
€5.4 million from the National Institute for Health and Disability Insurance (2022: nil).
This grant aimed to incentivize innovative Belgian biotech companies who are
performing research and development activities in order to identify new medicines.
R&D incentives income was primarily composed of:
Income from an innovation incentive system of the French government, which
represented €11.4 million for the year ended 31 December 2022 compared to
€12.4 million for the year ended 31 December 2021
Income from Belgian R&D incentives with regard to incurred R&D expenses, which
represented €17.3 million for the year ended 31 December 2022 compared to
€20.9 million for the year ended 31 December 2021
Tax rebates on payroll withholding taxes of R&D personnel in Belgium and the
Netherlands,
the year ended 31 December 2022
compared to €11.7 million for the year ended 31 December 2021.
representing €9.9 million for
Other income increased from €1.5 million in 2021 to €6.4 million in 2022 mainly due to
rental income and a one-off sale of side products from our R&D activities.
188
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
8. Staff costs
The table below summarizes the number of our employees of our operations on
31 December 2022 and 2021:
Number of employees on 31 December
Total
2022
1,338
1,338
The average number of FTE’s of our operations during the years 2022 and 2021 was:
2021
1,309
1,309
2021
6
636
338
332
Year ended 31 December
2022
5
570
421
297
1,293
1,312
Year ended 31 December
2022
2021
(197,013)
(175,167)
(32,543)
(10,881)
(88,493)
(18,067)
(29,934)
(8,467)
(70,726)
(11,237)
(346,997)
(295,531)
Members of the Executive Committee
Research and development
Commercial and medical affairs
Corporate and support
Total
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
189
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
9. Fair value adjustments, net currency exchange
differences and other financial income/expenses
The following table summarizes fair value adjustments and net currency exchange
the years ended
differences, and other
31 December 2022 and 2021.
income and expenses for
financial
(thousands of €)
Fair value adjustments and net currency exchange differences:
Net currency exchange gain
Fair value re-measurement of warrants
Fair value loss on financial assets held at fair value through profit or loss
(Fair) value gain on current financial investments
Total fair value adjustments and net currency exchange differences
Other financial income:
Interest income
Discounting effect of non-current R&D incentives receivables
Other finance income
Total other financial income
Other financial expenses:
Interest expenses
Discounting effect of non-current deferred income
Discounting effect of other non-current liabilities
Other finance charges
Total other financial expenses
Year ended 31 December
2022
2021
44,359
186
-
6,929
51,473
18,110
93
376
18,578
(6,967)
(7,672)
(2,271)
(769)
56,492
2,960
(4,919)
6,763
61,296
2,865
93
100
3,058
(11,656)
(9,289)
-
(812)
(17,679)
(21,757)
Total net financial result
52,372
42,598
During 2022 we changed the presentation of our financial results in our consolidated
income statement in order to isolate the net currency exchange differences and fair value
re-measurements. We retrospectively adjusted the 2021 comparative figures to reflect
this change. In our 2021 consolidated financial statements we reported total currency
exchange gains of €60.7 million and total currency exchange losses of €4.2 million for
the year ended 31 December 2021 on the "other financial income" and "other financial
expenses" line respectively. The (fair) value gains on current financial investments (€6.8
million for the year ended 31 December 2021) were also reported on the line "other
financial income" in our 2021 consolidated financial statements.
The net currency exchange gain in 2022 of €44.4 million primarily consisted of an
unrealized exchange gain of €41.3 million on cash and cash equivalents and current
190
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
investments at amortized cost held in U.S. dollars, as compared to an
financial
unrealized exchange gain in 2021 of €56.6 million on cash and cash equivalents and
current financial investments at amortized cost held in U.S. dollars. 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.
Fair value re-measurement of warrants refers to the fair value re-measurement of initial
warrant B. The fair value of the financial liability related to the initial warrant B of
€0.02 million on 31 December 2022 (€0.2 million on 31 December 2021) is presented as
part of trade and other liabilities in our consolidated statement of financial position and
will be re-measured at each reporting period. We refer to note 2 for more information.
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. This resulted in a
net book value of zero of the financial assets held at fair value through profit or loss on
31 December 2021. The fair value gain on the current financial investments in 2022 and
2021 reflected the positive exchange differences booked on the money market funds,
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
2022 and on 31 December 2021. These re-measurement losses were mainly the result of
the negative returns on the EUR denominated money market funds.
Interest income was related to interests on term deposits, notice accounts and current
financial investments. Net interest income increased due to increasing interest rates.
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 2022 also
included €7.7 million of costs (€9.3 million for the year ended 31 December 2021) 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. They also comprise the discounting effect of other non-current liabilities as
deferred consideration and milestones payables related to the acquisition of
subsidiaries.
191
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
10. Income taxes
The following table summarizes the income tax recognized in profit or loss for the years
ended 31 December 2022 and 2021.
(thousands of €)
Current tax
Deferred tax
Total income taxes
Year ended 31 December
2022
(4,071)
1,227
(2,844)
2021
(2,020)
(404)
(2,423)
Current tax, consisting of corporate income taxes, and deferred tax income/cost (–)
related to subsidiaries working on a cost plus basis. In addition, the deferred tax income
for the year ended 31 december 2022 was largely due to the partial release of the net
deferred tax liabilities related to the acquisitions of CellPoint and AboundBio.
Tax liabilities
The below table illustrates the tax liabilities related captions in the consolidated
statement of financial position as at 31 December 2022 and 2021.
(thousands of €)
Current tax payable
Total tax liabilities
31 December
2022
1,022
1,022
2021
1,782
1,782
On 31 December 2022, the tax liabilities were primarily related to our subsidiaries
operating on a cost plus basis.
Taxes recognized in profit or loss
For the purpose of the disclosure below corporate tax was calculated at 25% (2021:
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.
192
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
(thousands of €)
Loss before tax
Income tax debit/credit (-), calculated using the Belgian statutory tax rate on
the accounting profit/loss (-) before tax (theoretical)
Tax expenses in income statement (effective)
Difference in tax expenses/income to explain
Effect of tax rates in other jurisdictions
Effect of non-taxable revenues
Effect of share-based payment expenses without tax impact
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
Effect of non-recognition of deferred tax assets
Effect of derecognition of previously recognized deferred tax assets
Effect of use of investment deduction
Total explanations
Year ended 31 December
2022
2021
(215,147)
(122,999)
(53,787)
2,844
56,631
(337)
(7,642)
22,127
(146)
3,224
(1,677)
-
1,101
38,104
1,877
-
56,631
(30,750)
2,423
33,173
(582)
(9,413)
17,682
(907)
3,812
(1,411)
(404)
(840)
25,613
135
(512)
33,173
Non-taxable revenues for the years ended 31 December 2022 and 2021 were related to
non-taxable subsidies and tax credits.
193
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
11. 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.
Year ended 31 December
2022
2021
Net loss attributable to owners of the parent (thousands of €)
(217,991)
(103,231)
Number of shares (thousands)
Weighted average number of shares for the purpose of basic income/loss (-)
per share
65,699
65,500
Basic loss per share (€)
(3.32)
(1.58)
Net loss attributable to owners of the parent (thousands of €)
(217,991)
(103,231)
Number of shares (thousands)
Weighted average number of shares for the purpose of diluted income/loss
(-) per share
Number of dilutive potential ordinary shares
65,699
-
65,500
-
Diluted loss per share (€)
(3.32)
(1.58)
As we reported a net loss in 2022 and 2021, the outstanding subscription rights (specified
in note 31) have an anti-dilutive effect rather than a dilutive effect. Consequently, basic
and diluted loss per share is the same for 2022 and 2021.
194
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
12. Goodwill and impairment of goodwill
(thousands of €)
On 1 January 2022
Recognized on acquisition of subsidiaries
Exchange differences on goodwill
On 31 December 2022
Goodwill
-
69,893
(80)
69,813
The goodwill resulting from both the acquisition of CellPoint (€62.4 million) and
AboundBio (€7.4 million) was allocated to the same cash-generating unit (CGU),
“oncology”. The intangible assets acquired as a result of both business combinations
were also allocated to this cash-generating unit, together with some other (in)tangible
assets related to the “oncology” cash-generating unit. The valuation method of the
recoverable amount of this cash-generating unit is based on the fair value less costs of
disposal.
The valuation technique that was applied to determine the fair value less costs of
disposal of the cash-generating unit is a discounted cash flow method (“DCF”) with
projected cash flows that cover a period of 13 years. The period considered exceeds
five years because the main sales are expected for the period beyond 2027. The key
assumptions used in this valuation (level 3 in the fair value hierarchy) of the recoverable
amount of the underlying cash-generating unit were:
Probability of success of our clinical programs that is based on benchmarks in
combination with management estimate
Terminal growth rate of –50% reflecting the anticipated sales evolution beyond 2035
Discount rate of 12.5%
Future revenue and investment assumptions are based on management estimate of
the overall cell therapy market
No impairment was identified per 31 December 2022.
Reference is made to note 26 “Business combinations during the period” for a detailed
description of both business combinations.
195
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
13. Intangible assets other than goodwill
(thousands of €)
Acquisition value
On 1 January 2021
Additions
Sales and disposals
Translation differences
On 31 December 2021
Impact of acquisitions of businesses
Additions
Sales and disposals
Translation differences
On 31 December 2022
Amortization and impairment
On 1 January 2021
Amortization
Impairment
Sales and disposals
Translation differences
On 31 December 2021
Amortization
Impairment
Sales and disposals
Translation differences
On 31 December 2022
Carrying amount
On 31 December 2021
On 31 December 2022
Software &
databases
Licences, rights,
technology and
in-process R&D
Contract costs
Total
23,717
2,423
(1,643)
57
24,554
1,126
(913)
44,432
1,250
(5,753)
39,929
124,570
8,423
(36,298)
(36)
15,384
15,384
83,534
3,673
(7,396)
57
79,868
124,562
9,557
(37,211)
(36)
24,767
136,588
15,384
176,740
10,034
3,529
(1,643)
57
11,977
3,967
(913)
15,031
3,883
2,053
4,016
(5,753)
4,199
6,666
35,666
(36,298)
(4)
10,229
2,050
1,538
3,588
1,538
5,126
15,968
7,120
4,016
(7,396)
57
19,765
12,171
35,666
(37,211)
(4)
30,387
12,577
9,736
35,730
126,359
11,796
10,258
60,103
146,354
Impact of acquisition of businesses in 2022 refers to the acquisition of CellPoint and
AboundBio. We refer to note 26 “Business combinations during the period”.
196
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
New additions in 2022 primarily related to the capitalization of an in-licensing fee for
an amount of €7.5 million and of a milestone payment of $1.0 million, and software
acquisitions for a total amount of €1.1 million.
In 2022 we recorded an impairment of €26.7 million on previously capitalized upfront
fees related to our collaboration with Molecure on the dual chitinase inhibitor OATD-01
(GLPG4716) in fibrosis, and impairments of €8.9 million on intangible assets related to
other discontinued projects.
On 31 December 2022, our balance sheet did not hold any internally generated assets
capitalized as intangible asset.
197
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
14. Property, plant and equipment
Fully owned
(thousands of €)
Acquisition value
On 1 January 2021
Additions
Sales and disposals
Reclassifications
Translation differences
On 31 December 2021
Impact of acquisitions of
businesses
Additions
Sales and disposals
Reclassifications
Translation differences
On 31 December 2022
Depreciation and impairment
On 1 January 2021
Depreciations
Impairment
Sales and disposals
Translation differences
On 31 December 2021
Depreciations
Sales and disposals
Translation differences
On 31 December 2022
Carrying amount
On 31 December 2021
On 31 December 2022
Land, building
and building
improvements
Installation &
machinery
Furniture,
fixtures &
vehicles
Other tangible
assets
16,739
1,924
7,273
195
26,131
29
914
(2,846)
64,286
205
88,719
3,728
1,749
28
5,505
4,433
(2,173)
49
7,814
37,607
4,453
(1,001)
5,210
1
46,270
2,117
5,688
(600)
3,580
(15)
57,040
22,350
3,398
(1,000)
1
24,749
4,336
(574)
(1)
28,510
7,352
434
(1,177)
1,175
45
7,829
108
3,438
(1,344)
167
43
10,241
4,628
1,113
(1,178)
18
4,582
1,265
(1,328)
18
4,537
37,273
46,028
(9,316)
(13,658)
(3)
60,324
19,296
(68,033)
11,587
-
9,316
(9,316)
-
-
Total
98,972
52,839
(11,494)
-
238
140,555
2,254
29,336
(4,790)
-
233
167,588
30,708
6,260
9,316
(11,494)
47
34,837
10,034
(4,075)
66
40,862
20,626
80,905
21,521
28,530
3,247
5,704
60,324
11,587
105,718
126,726
The other tangible assets primarily consist of assets under construction, which are not
yet available for use and therefore not yet depreciated as per 31 December 2022.
During 2022, the construction of our new building in Oegstgeest (the Netherlands) was
completed which explains the reclassification from “other tangible assets” to “land,
building and building improvements” for €64.3 million.
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).
198
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Land & building
Installation &
machinery
Furniture,
fixtures &
vehicles
39,678
1,722
(4,160)
221
37,461
703
(3,554)
224
34,834
8,651
5,466
(1,696)
79
12,500
4,421
(2,602)
105
14,424
24,961
20,410
734
110
(251)
593
(156)
437
464
161
(251)
374
134
(156)
352
219
85
5,812
5,092
(722)
2
10,184
3,603
(1,274)
(8)
12,505
1,995
2,296
(722)
3,569
3,141
(1,235)
(2)
5,473
6,615
7,032
Total
46,225
6,924
(5,133)
223
48,239
4,306
(4,984)
216
47,777
11,111
7,923
(2,669)
79
16,444
7,696
(3,993)
103
20,250
31,794
27,526
Right-of-use
(thousands of €)
Acquisition value
On 1 January 2021
Additions
Sales and disposals
Translation differences
On 31 December 2021
Additions
Sales and disposals
Translation differences
On 31 December 2022
Depreciation and impairment
On 1 January 2021
Depreciations
Sales and disposals
Translation differences
On 31 December 2021
Depreciations
Sales and disposals
Translation differences
On 31 December 2022
Carrying amount
On 31 December 2021
On 31 December 2022
Carrying amount
(thousands of €)
Property, plant and equipment fully owned
Right-of-use
Total property, plant and equipment
31 December
2022
126,726
27,526
154,252
2021
105,718
31,794
137,512
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.
199
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
15. Other non-current assets
Other non-current assets consisted of non-current restricted cash and other non-current
assets.
(thousands of €)
Non-current restricted cash
Other non-current assets
Total other non-current assets
31 December
2022
4,569
1,209
5,778
2021
1,425
1,048
2,473
Restricted cash on 31 December 2022 was composed of bank guarantees on real estate
lease obligations for €1.8 million as well as bid and performance bonds of €2.5 million
and bank guarantees on import duties of €0.3 million.
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 2022, and 2021.
(thousands of €)
Non-current R&D incentives receivables
Current R&D incentives receivables
Total R&D incentives receivables
31 December
2022
119,941
26,126
146,067
2021
127,186
16,827
144,013
The increase in R&D incentives receivables is explained by additional R&D incentives
reported in 2022 for €28.7 million (€11.4 million related to French incentives and
€17.3 million related to Belgian incentives), by the release of discounting profit of
€0.1 million, partly offset by the setup of tax provisions in France and Belgium for
respectively €0.2 million and €0.2 million and decreased by the payments received in
2022 related to French and Belgian incentives amounting to respectively €10.2 million
and €16.1 million. The R&D tax 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 2022.
200
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
31 December 2022
Maturity date
(thousands of €)
2024
2025
2026
2027
2028 –
2030
Total
French non-current R&D
incentives receivables -
discounted value
Belgian non-current R&D
incentives receivables -
discounted value
Total non-current R&D
incentives receivables -
discounted value
11,713
11,495
11,207
34,415
16,805
18,604
19,443
13,908
16,767
85,526
28,518
30,099
30,650
13,908
16,767
119,941
17. Inventories
The following table provides an overview of our inventories by type of inventory:
(thousands of €)
Raw materials
Semi-finished products
Finished products
Total inventories
31 December
2022
39,071
5,791
8,063
52,925
2021
14,351
1,376
4,842
20,569
The cost of inventories, which is recognized as an expense and included in the “cost of
sales” line, amounted to €12.1 million for the year ended 31 December 2022. Finished
goods at 31 December 2022 consisted in full out of Jyseleca® finished products.
18. Trade and other receivables and other current
assets
(thousands of €)
Trade receivables
Prepayments
Other receivables
Trade and other receivables
Accrued income
Deferred charges
Other current assets
Total trade and other receivables & other current assets
31 December
2022
28,194
488
11,747
40,429
11,277
12,029
23,307
63,735
2021
91,786
202
19,349
111,337
639
9,306
9,945
121,282
201
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Trade and other receivables decreased primarily due to the outstanding receivables
as at 31 December 2021 of €50.0 million on Gilead related to the additional payments
in the scope of the renegotiated agreement of December 2020 for filgotinib, and of
€12.6 million ($15 million) on Gilead following the agreement for the take-over by us of
the DIVERSITY clinical trial, which were both paid in 2022. 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 interest income and deferred charges.
On 31 December 2022, we did not have any provision for expected credit losses.
19. Current financial investments
(thousands of €)
Money market funds
Treasury bills
Term deposits
Total current financial investments
31 December
2022
2021
1,292,514
1,317,460
749,835
1,543,596
877,349
275,000
3,585,945
2,469,809
Term deposits refer to non-cancellable term deposits with a maturity exceeding three
months from the acquisition date. Our portfolio of treasury bills contains only AAA rated
paper, issued by Germany. Our money market funds portfolio 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 2022, our current financial investments included $809.6 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 net exchange differences
(exchange difference on term deposits) and in the fair value result of current financial
investments (exchange difference on money market funds) in our consolidated income
statement.
We refer to note 34 for more information on our current financial investments and to
note 9 for more details about the fair value re-remeasurements and currency exchange
gains or losses recognized in our income statement.
202
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
20. Cash and cash equivalents
(thousands of €)
Cash at banks
Term deposits
Total cash and cash equivalents
31 December
2022
458,117
50,000
508,117
2021
1,225,860
1,007,508
2,233,368
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 2022 comprised
€50.0 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 2022, our cash and cash equivalents included $97.3 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 9 for more details about the currency exchange gains
or losses recognized in our consolidated income statement.
203
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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
2022
292,075
1,530
-
2021
291,312
763
-
Share capital on 31 December
293,604
292,075
Aggregate share capital
Costs of capital increase (accumulated)
Share capital on 31 December
356,112
(62,507)
293,604
354,582
(62,507)
292,075
Costs of capital increases are netted against the proceeds of capital increases,
accordance with IAS 32 Financial instruments: disclosure and presentation.
in
History of share capital
The history of the share capital of Galapagos NV between 1 January 2021 and
31 December 2022 is as follows:
Date
1 January 2021
19 March 2021
7 June 2021
20 September 2021
3 December 2021
31 December 2021
1 January 2022
18 March 2022
20 June 2022
27 September 2022
31 December 2022
Share capital
increase due to
exercise
subscription rights
(in thousands €)
Number of shares
issued
(in thousands
of shares)
Aggregate number
of shares after
transaction
(in thousands
of shares)
Aggregate share
capital after
transaction
(in thousands €)
65,412
353,819
540
59
41
123
517
434
579
100
11
8
23
96
80
107
65,553
354,582
65,553
354,582
65,836
356,112
204
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
On 31 December 2022, Galapagos NV’s share capital amounted to €356,112 thousand,
represented by 65,835,511 shares. All shares were issued, fully paid up and of the same
class.
All of the share issuances listed above were for cash consideration.
The below table summarizes our capital increases for the years 2022 and 2021.
(thousands of €, except share data)
shares Share capital
Number of
Share capital
and
share
premium
Share
premium
Average
exercise price
subscription
rights
(in
€/subscription
right)
Closing share
price on date
of capital
increase
(in €/share)
On 1 January 2021
65,411,767
291,312
2,727,840
3,019,153
19 March 2021: exercise of
subscription rights
7 June 2021: exercise of
subscription rights
20 September 2021: exercise
of subscription rights
3 December 2021: exercise of
subscription rights
99,814
540
1,718
2,258
22.62
68.48
10,940
7,600
59
41
266
325
29.73
61.78
111
152
19.97
46.93
22,600
123
456
579
25.61
41.72
On 31 December 2021
65,552,721
292,075
2,730,391
3,022,467
205
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
(thousands of €, except share data)
shares Share capital
Number of
Share capital
and
share
premium
Share
premium
Average
exercise price
subscription
rights
(in
€/subscription
right)
Closing share
price on date
of capital
increase
(in €/share)
On 1 January 2022
65,552,721
292,075
2,730,391
3,022,467
18 March 2022: exercise of
subscription rights
20 June 2022: exercise of
subscription rights
27 September 2022: exercise
of subscription rights
95,500
517
1,643
2,160
22.61
57.38
80,290
434
1,025
1,460
18.18
53.52
107,000
579
2,497
3,076
28.75
44.49
On 31 December 2022
65,835,511
293,604
2,735,557
3,029,162
The Board of Directors 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 such
renewal in the Annexes to the Belgian State Gazette, which occurred on 13 November
2019. This general authorization will expire on 12 November 2024.
A specific authorization for capital increases of more than 20% and up to 33% of the
share capital at the time of the convening of 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 such renewal in the Annexes to the Belgian State Gazette,
which occurred on 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 Board of Directors that all independent members of the Board of Directors
(within the meaning of article 7:87 of the Belgian Companies Code and 2020 Code)
approve. The Board of Directors 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 expired on
30 May 2022.
As of 31 December 2022, an amount of €24,889,284.17 still remained available under the
general part of the authorized capital.
206
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
22. Deferred tax
(thousands of €)
Recognized deferred tax assets and liabilities
Assets
Liabilities
31 December
2022
2021
1,363
20,148
4,032
-
Deferred tax assets unrecognized
460,102
408,892
Deferred taxes in the consolidated income statement
Tax benefit arising from previously unrecognized tax assets used to reduce
deferred tax expense (+)
Deferred tax benefit/expenses (-) relating to temporary differences
Deferred tax expenses relating to use or derecognition of previously
recognized deferred tax assets
1,227
1,677
1,899
(404)
1,411
(629)
(2,348)
(1,185)
Following table shows the movements in deferred tax assets and deferred tax liabilities:
Intangible assets
other than
goodwill
Retirement
benefit liabilities
Tax loss
carryforward
1,440
2,907
Other
127
Total
4,475
(623)
226
(7)
(404)
(thousands of €)
On 1 January 2021
Credited/charged (-) to
profit or loss
Charged to other comprehensive
income/loss (-)
Translation differences
On 31 December 2021
Impact of acquisitions of
businesses
Credited/charged (-) to
profit or loss
Reclassifications
-
(23,265)
2,842
275
Charged to other comprehensive
income/loss (-)
Translation differences
On 31 December 2022
(20,148)
(74)
33
776
17
(795)
22
19
3,133
(1,797)
(275)
1,061
(74)
35
4,032
(23,265)
1,227
-
(795)
16
(18,785)
2
122
165
(6)
281
The consolidated tax losses, innovation income deduction, dividend received deduction
and investment deduction carried forward and the deductible temporary differences
on 31 December 2022 amounted in total to €1,882.5 million (2021: €1,653.7 million),
€2.7 million were related to tax losses with expiry date between 2028 and 2034.
207
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
The available tax losses carried forward that can be offset against possible future taxable
profits amounted to €883.6 million on 31 December 2022 (€635.6 million on 31
December 2021) and can be carried forward for an indefinite period except for an
amount of €2.7 million in the United States with expiry date between 2028 and 2034. On
31 December 2022, the available tax losses carried forward in Galapagos NV (Belgium)
amounted to €769.9 million (2021: €556.9 million). In addition to the latter, Galapagos
NV (Belgium) also benefits from the Belgian innovation income deduction regime which
led to report, on 31 December 2022, a carried forward tax deduction amounting to
€346.2 million (2021: €301.3 million) that can also be offset against possible future
taxable results. In addition, Galapagos NV (Belgium) also has available investment
deduction carried forward of €1 million (2021: €1 million) and dividend received
deduction carried forward of €18.7 million (2021: €8.2 million) that can be offset against
possible 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 2022, except for one subsidiary operating on a cost
plus basis,
for which a deferred tax asset was recognized for €1.1 million (2021:
€4.0 million, for two subsidiaries).
Net deferred tax liabilities were initially calculated based on the fair value of the
intangible assets identified from the acquisition of CellPoint and AboundBio, adjusted
by considering the related recognizable deferred tax assets. We refer to note 26 for more
information on the purchase price allocation of the business combinations.
23. Lease liabilities
(thousands of €)
Lease liabilities
Within one year
In the second to fifth years inclusive
After five years
Lease payments
Present value of lease payments
31 December
31 December
2022
2021
2022
2021
7,507
14,401
609
22,517
7,557
18,873
1,291
27,720
7,209
14,100
592
21,901
7,204
18,381
1,274
26,859
Less future finance charges
Present value of lease obligation
616
861
21,901
26,859
Less amount due for settlement within 12 months
Amount due for settlement after 12 months
7,209
14,692
7,204
19,655
208
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
24. Trade and other liabilities and other non-current
liabilities
(thousands of €)
Trade and other liabilities
Current contingent consideration related to milestones CellPoint
Current deferred consideration payable CellPoint
Current financial instruments
Accrued charges
Total trade and other liabilities
Non-current contingent consideration related to milestones CellPoint
Other non-current liabilities
Total other non-current liabilities
31 December
2022
133,298
8,485
6,222
19
651
2021
134,304
-
-
204
3,114
148,675
137,622
13,582
8,226
21,808
-
7,135
7,135
The increase in both trade and other liabilities and other non-current liabilities can
be largely explained by contingent and deferred considerations payable related to the
acquisition of CellPoint, recorded in 2022.
The contingent consideration arrangement relating to the acquisition of CellPoint
requires us to pay the former owners of CellPoint additional considerations up to €100.0
million. This amount is due when certain sequential development (€20.0 million),
regulatory (€30.0 million) and sales-based (€50.0 million) milestones would be achieved.
Total fair value at acquisition date of these milestones amounted to €20.2 million.
The fair value measurement is based on significant inputs that are not observable in
the market, which are classified as Level 3 inputs. Key assumptions in the valuation
at 31 December 2022 include a discount rate of 12.5%, an appropriate probability of
success of reaching these milestones and expected timing of these milestones. A change
in probabilities of success of each milestone by 5 percentage points would result in a
change of €3.1 million in the total contingent consideration liability on 31 December
2022.
As per 31 December 2022 no change was made to the key assumptions. The only impact
that was recognized compared to the date of acquisition is the discounting effect. This is
recognized on the line “other financial expenses”.
Of the total contingent consideration liability at 31 December 2022, €8.5 million is
expected to be paid within one year and therefore presented on the line “trade and other
liabilities” in our statement of financial position. The long-term portion, amounting to
€13.6 million, is presented on the line “other non-current liabilities”.
209
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
25. Deferred income
The movement in the non-current and current deferred income is detailed in the table
below.
(thousands of €)
On 1 January 2021
Upfront consideration
Significant financing component(2)
Revenue recognition of upfront
Revenue recognition of milestones
Other movements
Total
2,809,133
12,643
9,289
(433,884)
(32,408)
(67)
Gilead collaboration
agreement for
filgotinib
Gilead collaboration
agreement for drug
discovery platform(1)
Other deferred
income
818,654
1,990,412
67
12,643
9,289
(203,301)
(32,408)
(230,582)
(67)
-
3,474
3,474
On 31 December 2021
2,364,701
604,875
1,759,828
Milestones achieved
Significant financing component(2)
Revenue recognition of upfront
Revenue recognition of milestones
Other movements
18,238
7,672
(370,078)
(34,777)
3,474
18,238
7,672
(139,655)
(34,777)
(230,423)
On 31 December 2022
1,989,230
456,352
1,529,405
(1) The upfront received and the outstanding balance at 31 December 2022 and at 31 December 2021 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.
26. Business combinations during the period
On 21 June 2022 we acquired, in an all-cash transaction, 100% of the shares and voting
interests of CellPoint for a total agreed payment at completion of €125 million, including
consideration for other liabilities associated with the transaction amounting to
€10.3 million. Additional contingent consideration up to €100.0 million is due when
certain milestones would be achieved.
On the same date we acquired all of the outstanding capital of AboundBio, for a total
agreed price of $14 million, including consideration for other liabilities associated with
the transaction.
210
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
The main reason for these acquisitions is to position ourselves in the next-generation
cancer therapy market and to significantly broaden our portfolio and capabilities. As
a result of these acquisitions, we gain access to an innovative, scalable, decentralized
and automated point-of-care cell therapy supply model as well as a next-generation fully
human antibody-based therapeutics platform. Combined and supported by us as a fully
integrated biopharma, they have the potential to disrupt the CAR-T treatment paradigm.
The goal is to expand the current market for CAR-T therapies and have an important
impact on patients in need of additional and improved treatment options.
At the time of approval for issuance of these consolidated financial statements, our initial
accounting for the business combinations, including the purchase price allocation, has
been completed.
Details of the fair value of identifiable assets and liabilities acquired in both transactions,
the purchase consideration, the goodwill at the acquisition date and the net cash
outflow arising on acquisition are as follows:
21 June 2022
CellPoint
AboundBio
Total
Book
value Adjustment Fair value
Book
value Adjustment Fair value
(thousands of €)
Intangible assets other than
goodwill
-
120,517
120,517
Property, plant and equipment
1,289
Other non-current assets
Trade and other receivables
Cash and cash equivalents
Other current assets
81
162
3,179
1,254
1,289
81
162
3,179
1,254
Deferred tax liabilities
-
(22,368)
(22,368)
Trade and other liabilities
(32,789)
Current deferred income
-
(32,789)
-
-
965
4
-
4,279
536
-
(587)
(474)
4,053
4,053
965
4
-
4,279
536
(907)
(587)
(474)
(907)
Net assets acquired
(26,824)
98,149
71,325
4,723
3,146
7,869
Consideration paid in cash
Fair value re-measurement of
previously held equity
investment
Deferred consideration
Fair value of contingent
consideration
Fair value of total consideration
107,750
5,808
20,211
133,769
14,976
342
-
-
15,318
211
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
21 June 2022
CellPoint
AboundBio
Total
62,444
62,444
107,750
(3,179)
104,571
7,449
(80)
7,369
69,813
14,976
(4,279)
10,698
115,270
28,164
28,164
Goodwill
Exchange differences on
goodwill
Goodwill in the balance sheet
Net cash outflow arising on
acquisition
Consideration paid in cash
Less: cash and cash equivalents
balances acquired
Cash out from acquisition of
subsidiaries, net of cash
acquired
Cash used in operating
activities for other liabilities
related to the acquisition of
subsidiaries
As part of the acquisitions, we identified the following acquired intangible assets:
IPR&D: in-process research and development related to two CD19 CAR-T product
candidates in Phase 1/2a clinical studies. The fair value at acquisition date
(€28.2 million) was based on the relief from royalty method.
Exclusive rights: through the acquisition of CellPoint we acquired on the one hand
a collaboration agreement between CellPoint and Lonza providing the exclusive
right to use the automated Lonza Cocoon® Platform in the development and
commercialization of CAR-T cell products, and secondly, a collaboration agreement
between CellPoint and Hypertrust providing exclusivity to use the jointly developed
XCellit software for workflow management and monitoring for the manufacturing of
the CAR-T cells using the Lonza Cocoon® Platform. The fair values at acquisition date
amounted to €89.7 million and €2.6 million respectively. A with and without method
was retained to value the exclusivity with Lonza and the XCellit software was valued
based on the applicable royalty rate in the contract.
Technology: through the acquisition of AboundBio, we acquired a fully human
antibody-based therapeutics platform which was valued at €4.1 million at the time of
acquisition.
We assessed that the carrying value of all other acquired assets and assumed liabilities
approximate their fair value at acquisition date.
The goodwill arising from both transactions totaling €69.8 million is attributable to buyer
specific synergies, the value of the assembled workforce and the accounting for net deferred
212
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
tax liabilities for a total amount of €23.3 million, consisting of deferred tax liabilities on the
acquired intangible assets of €32.3 million less recognized deferred tax assets of €9.0 million.
The acquisition costs related to both transactions were considered not to be material
and were recognized in our consolidated income statement on the line "general &
administrative expenses”.
Since the acquisition date, there has not been a material contribution by both acquired
companies to total revenues and total result, nor were there major expenses prior to the
acquisitions, except for expenses directly linked to the acquisitions.
213
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
27. 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).
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 three years for which we have purchase commitments for an aggregate amount of
€12.2 million on 31 December 2022.
Disposal of Fidelta
Consideration received
(thousands of €)
Cash received
Total consideration received
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
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
214
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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
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 subsidiaries, net of cash disposed of
Result from discontinued operations
(thousands of €, except share and per share data)
Gain on sale of subsidiaries
Operating profit
Profit before tax
Net profit
Basic and 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)
Cash flow from discontinued operations
(thousands of €)
Net cash flow generated from investing activities
Net cash flow from discontinued operations
Year ended 31 December
2022
-
-
215
Galapagos NV Annual Report 2022
37,080
(13,658)
(731)
(500)
22,191
37,080
(7,884)
29,196
(500)
28,696
Year ended 31
December 2021
22,191
22,191
22,191
22,191
0.34
65,500
65,831
2021
28,696
28,696
FINANCIAL STATEMENTS
28. Note to the cash flow statement
(thousands of €)
Adjustment for non-cash transactions
Depreciation and impairment
Share-based compensation expenses
Increase/decrease (-) in retirement benefit obligations and provisions
31 December
2022
2021
65,566
88,506
136
34,636
70,726
(2,347)
Unrealized exchange gains and non-cash other financial result
(41,970)
(57,073)
Discounting effect of non-current deferred income
Discounting effect of other non-current liabilities
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
Total adjustment for non-cash transactions
Adjustment for items to disclose separately under operating cash flow
Interest expense
Interest income
Tax expense
7,672
2,271
(186)
(6,929)
-
2,229
117,296
6,967
(14,344)
2,844
9,289
-
(2,960)
(119)
4,919
648
57,718
11,656
(2,853)
2,423
Total adjustment for items to disclose separately under operating
cash flow
(4,533)
11,227
Adjustment for items to disclose under investing and financing cash flows
Gain on sale of subsidiaries
Gain on sale of fixed assets
Realized exchange gain on sale of current financial investments
Interest income on current financial assets
-
(23)
-
(3,766)
(22,191)
-
(6,645)
(12)
Total adjustment for items to disclose separately under investing and
financing cash flow
(3,789)
(28,847)
Change in working capital other than deferred income
Increase in inventories
Decrease in receivables
Decrease in liabilities
Total change in working capital other than deferred income
(34,588)
68,984
(2,083)
32,313
(21,168)
79,859
(35,353)
23,337
As the increase in trade and other liabilities and other non-current liabilities in the
balance sheet was mainly related to the acquisition of Cellpoint, we show a decrease in
liabilities in the annex to the cash flow statement.
216
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
29. Off-balance sheet arrangements
Contractual obligations and commitments
On 31 December 2022, we had outstanding obligations
commitments, which become due as follows:
for
future purchase
(thousands of €)
Total
Less than
1 year
1 – 3 years
3 – 5 years
More than
5 years
Purchase commitments
398,627
240,237
136,560
20,797
1,032
On 31 December 2021, we had outstanding obligations
commitments, which become due as follows:
for
future purchase
(thousands of €)
Total
Less than
1 year
1 – 3 years
3 – 5 years
More than
5 years
Purchase commitments
369,937
212,065
105,947
46,426
5,499
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 €281.6 million
on 31 December 2022 (€369.9 million at 31 December 2021), for which we have purchase
at
commitments
31 December 2021) reflected in the tables above.
31 December 2022
(€169.6 million
€217.3 million
of
at
30. 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 customary representations and warranties
which are capped and limited in time.
31. 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, for
members of the Board of Directors and Executive Committee, and independent
consultants of Galapagos NV.
The subscription rights offered to members of the Board of Directors 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 members of the Board of Directors (non-executive directors),
taking into account the stricter rules of the Belgian Companies Code.
217
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Subscription rights issued and accepted 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.
Subscription rights under Subscription Right Plan 2021 BE cannot be exercised before
the end of the third calendar year following the year of the grant. Subscription rights
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, 2022, 25% as of 1
January, 2023 and 50% (the remainder) as of 1 January, 2024.
During 2022, the Board of Directors issued subscription rights under several Subscription
Right Plans:
On 13 January 2022, the Board of Directors (formerly the Supervisory Board) issued
30,000 subscription rights (after acceptance by the beneficiary) within the framework
of the authorized capital, for the benefit of a member of the personnel of the group
under Subscription Right Plan 2022 (A). Subscription rights granted under
Subscription Right Plan 2022 (A) vest in instalments: with 25% 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 Board of Directors (formerly the Supervisory Board) issued
1,000,000 subscription rights (after acceptance by the beneficiary) within the
framework of the authorized capital, for the benefit of a member of the personnel of
the group under Subscription Right Plan 2022 (B). Subscription rights granted under
Subscription Right Plan 2022 (B) will in principle not vest prior to 1 January 2026.
On 6 May 2022, the Board of Directors issued 2,091,239 subscription rights (after
acceptance by the beneficiaries) within the framework of the authorized capital, for
the benefit of the Executive Committee members and employees of the group under
Subscription Right Plan 2022 BE, Subscription Right Plan 2022 RMV and Subscription
Right Plan 2022 ROW. Subscription rights granted under Subscription Right Plan 2022
BE will in principle not vest prior to 1 January 2026 and subscription rights granted
under Subscription Right Plan 2022 RMV and Subscription Right Plan 2022 ROW vest
in instalments: with 25% of each grant as of 1 January 2024, 25% as of 1 January 2025
and 50% (the remainder) as of 1 January 2026.
218
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
The table below sets forth a summary of subscription rights outstanding and exercisable
on 31 December 2022, per subscription right plan:
Forfeited
during the
year
Expired
during the
year
Outstanding
at 31
December
2022
Exercisable at
31 December
2022
Subscription
right plan
2014
2015
2015 (B)
2015 RMV
2016
2016 RMV
2016 (B)
2017
Allocation date
Expiry date
25.07.2014
24.07.2022
30.04.2015
29.04.2023
22.12.2015
21.12.2023
22.12.2015
21.12.2023
01.06.2016
31.05.2024
01.06.2016
31.05.2024
20.01.2017
19.01.2025
17.05.2017
16.05.2025
2017 RMV
17.05.2017
16.05.2025
2018
19.04.2018
18.04.2026
2018 RMV
19.04.2018
18.04.2026
2019
10.04.2019
09.04.2027
2019 RMV
10.04.2019
09.04.2027
2020
2020 RMV
2021BE
2021RMV
2021ROW
2022 (A)
2022 (B)
2022BE
2022BE
2022RMV
2022ROW
2022ROW
Total
17.04.2020
16.04.2028
17.04.2020
16.04.2028
30.04.2021
29.04.2029
30.04.2021
29.04.2029
30.04.2021
29.04.2029
13.01.2022
12.01.2030
26.01.2022
25.01.2030
06.05.2022
05.05.2030
05.08.2022
04.08.2030
06.05.2022
05.05.2030
06.05.2022
05.05.2030
05.08.2022
04.08.2030
Exercise price
(€)
Outstanding
at 1 January
2022
Granted
during the
year
127,540
199,223
256,500
35,000
330,750
69,000
10,000
595,500
127,500
1,005,995
137,500
1,300,840
190,500
1,617,928
227,475
1,084,036
282,550
982,000
14.54
28.75
49.00
49.00
46.10
46.10
62.50
80.57
80.57
79.88
79.88
95.11
95.11
168.42
168.42
64.76
64.76
64.76
46.18
50.00
57.46
51.58
57.46
57.46
51.58
30,000
1,000,000
839,400
72,000
244,389
875,450
60,000
Exercised
during the
year
(127,540)
(136,000)
(15,000)
(4,250)
(1,000)
(5,500)
(31,000)
(83,850)
(4,500)
(159,684)
(18,400)
(42,888)
(24,850)
(198,625)
(7,858)
(1,675)
(27,600)
-
63,223
241,500
35,000
325,500
69,000
10,000
590,000
127,500
974,995
137,500
-
63,223
241,500
35,000
325,500
69,000
10,000
590,000
127,500
974,995
137,500
1,216,990
186,000
1,458,244
209,075
1,041,148
257,700
783,375
30,000
1,000,000
831,542
72,000
242,714
847,850
60,000
8,579,837
3,121,239
(282,790)
(607,430)
- 10,810,856
2,574,218
219
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Subscription rights
Weighted average
exercise price (€)
6,929,111
1,168,967
2,493,433
(701,753)
(140,954)
-
8,579,837
1,751,013
3,121,239
(607,430)
(282,790)
-
10,810,856
2,574,218
103.95
37.84
64.76
118.53
23.51
-
92.69
56.64
54.71
100.00
23.68
-
83.12
70.26
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
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding on 31 December, 2022
Exercisable on 31 December, 2022
The table below sets forth the inputs into the valuation of the subscription rights.
2022 (A)
2022 (B)
2022BE
2022RMV/
ROW
2022BE/
2022ROW
2021BE
2021RMV/
ROW
13
January
2022
26
January
2022
6
May
2022
6
May
2022
6
August
2022
30
April
2021
30
April
2021
Exercise Price (€)
46.18
50.00
57.46
57.46
51.58
64.76
64.76
Weighted average share price at
acceptance date (€)
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
46.21
56.67
51.64
51.64
44.55
61.10
61.10
16.10
24.53
20.73
18.92
17.07
22.72
20.68
41.80
40.80
42.59
42.65
41.75
40.73
40.61
4.72
5.95
6.37
5.36
5.68
6.43
5.36
(0.13)
None
0.67
1.33
1.26
2.70
None
None
None
None
(0.21)
None
(0.29)
None
The exercise price of the subscription rights is determined pursuant to the applicable
provisions of the Belgian Law of 26 March 1999.
220
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 2022 in relation to subscription right plans
amounted to €88,506 thousand (2021: €70,726 thousand).
The following table provides an overview of the outstanding subscription rights per
category of subscription right holders on 31 December 2022 and 31 December 2021:
Category
Members of the Board of Directors
Executive Committee members
Personnel
31 December
2022
75,000
1,864,000
8,871,856
2021
157,560
1,965,000
6,457,277
Total subscription rights outstanding
10,810,856
8,579,837
The outstanding subscription rights at the end of the accounting period have a weighted
average exercise price of €83.12 (2021: €92.69) and a weighted average remaining life of
1,913 days (2021: 1,955 days).
Restricted stock units (RSUs)
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, in accordance with the terms and conditions of the relevant RSU
program.
We currently have the following RSU programs:
Plan 2020.I, Plan 2021.I and Plan 2022.I: these plans are intended to provide a long-
term incentive to certain of our employees and Executive Committee members and, as
of 2020, replace the deferred portion of the bonus under the former Senior Management
Bonus Scheme;
Plan 2019.II, Plan 2020.II, Plan 2021.II, Plan 2021.IV and Plan 2022.II: these plans are
designed with the aim to retain a specific group of our key employees and Executive
Committee members whose retention is considered so important for our future
performance that an additional incentive is desirable. The beneficiaries are nominated
by the Remuneration committee and the Board of Directors approves this list of
beneficiaries. The four-year vesting period is designed to be aligned with long-term
shareholder interests;
221
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Plan 2019.I: this plan was granted at the discretion of the Board of Directors;
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 and Plan 2022.III: these plans are 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 RSU 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 Executive Committee, 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.
The table below sets forth a summary of RSUs outstanding at 31 December 2022, per
RSU plan:
RSU plan
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.
Plan 2022.I.
Plan 2022.II.
Plan 2022.III.
Total
Allocation date
16.10.2019
16.10.2019
16.10.2019
06.05.2020
07.05.2020
05.05.2021
06.05.2021
03.06.2021-
06.08.2021
24.09.2021
03.05.2022
5.05.2022-
5.08.2022
07.06.2022
Outstanding
at 1
January
2022
Granted
during
the year
Forfeited
during
the year
Paid in cash
during
the year
Outstanding
at 31
December
2022
28,000
42,504
30,460
32,527
41,968
154,616
40,620
38,175
248,933
657,803
(28,000)
(20,483)
(30,460)
(8,058)
(13,511)
(34,870)
(8,801)
(12,683)
(62,230)
(9,090)
(7,359)
(10,831)
(27,146)
(9,478)
(9,233)
(84,865)
(14,480)
(403)
(172,885)
(219,096)
-
12,931
-
17,110
17,626
92,600
22,341
16,259
101,838
194,638
249,000
11,752
736,095
209,118
249,000
12,155
470,273
222
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
(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
2022
657,803
470,273
(172,885)
(219,096)
736,095
2021
313,596
511,518
(74,873)
(92,438)
657,803
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 re-measured at each reporting date. We recognize the corresponding
expense and liability over the vesting period. The total liability relating to outstanding
RSUs on 31 December 2022 amounted to €12.9 million (2021: €11.3 million).
The following table provides an overview of the outstanding RSUs per category of RSU
holders on 31 December 2022 and 31 December 2021.
Category (in number of RSUs)
Executive Committee members
Personnel
Total outstanding RSUs
32. Related parties
31 December
2022
332,038
404,057
736,095
2021
384,340
273,463
657,803
Relationship and transactions with entities with control of,
or significant influence over, Galapagos
Gilead
Gilead exercises 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 25.49% at
31 December 2021 and to 25.38% at 31 December 2022, due to seven capital increases
resulting from the exercise of subscription rights under employee subscription right
plans in the course of 2021 (four capital increases) and 2022 (three capital increases).
223
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
The presumption of significant influence is also confirmed by Gilead's right, for as long
as it holds more than 20% of Galapagos’ share capital, to appoint two investor Board
designees to Galapagos’ Board of Directors, out of a total of nine.
The following balances are outstanding at the end of the reporting period in relation to
Gilead:
(thousands of €)
Relations with Gilead
Trade and other receivables
Trade and other payables
31 December
2022
2021
7,877
-
88,246
11,580
The trade and other receivables on 31 December 2021 mainly contained €50 million of
receivables related to the in 2020 modified collaboration for filgotinib, €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 and €23.8 million of profit and
cost sharing receivables relating to our collaboration for filgotinib. All these amounts
were paid during 2022. The outstanding receivables on 31 December 2022 mainly relate
to development cost sharing receivables relating to our collaboration for filgotinib
(€5.0 million) and €2.6 million of receivables relating to royalties.
During 2022 we recognized in revenue €230.4 million (€230.6 million for the year ended
31 December 2021) relating to the performance obligation for the drug discovery
platform and a total of €174.4 million (€235.7 million for
the year ended
31 December 2021) 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.
Additionally, we recognized in 2022 royalty income for an amount of €10.7 million in
relation to the commercialization of
the year ended
31 December 2021).
filgotinib (€3.8 million for
the year ended
Furthermore, we recognized €0.4 million (€18.1 million for
31 December 2021) 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). A net amount of €2.4 million (€81.3 million for
the year ended
31 December 2021) relating to cross charges from and to Gilead relating to filgotinib was
recognized as expense on the line research and development expenditure.
Finally, we recognized in 2022 €0.03 million as a deduction of sales and marketing
expenses and €0.03 million as a research and development expenditure (compared to a
deduction of €59.7 million of sales & marketing expenses and a deduction of €7.0 million
of research & development expenditure for the year ended 31 December 2021) 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.
224
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
This profit/(cost) share mechanism for sales and marketing expenses came to an end
beginning of 2022, which explains the variance compared to 2021.
We purchased raw materials, semi-finished products and finished products of Jyseleca®
from Gilead for an amount of €13.5 million for the year ended 31 December 2022
(€24.9 million for the year ended 31 December 2021).
As at 31 December 2022 we have two outstanding performance obligations under IFRS
15 towards Gilead, which are 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 €1.5 billion for the drug discovery platform
(including the warrant issuance liability relating to subsequent warrant B) and
€456 million for the performance obligation relating to filgotinib.
A detailed explanation of our transactions with Gilead in 2022 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 33 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 Executive Committee
and members of the Board of Directors. 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 2022, our Executive Committee had four members: Stoffels IMC BV
(permanently represented by Dr. Paul Stoffels), Mr. Bart Filius, Dr. Walid Abi-Saab and
Mr. Michele Manto. They provide their services to us on a full-time basis. On
31 December 2022, our Board of Directors consisted of nine members: Stoffels IMC BV
(permanently represented by Dr. Paul Stoffels), Dr. Raj Parekh, Dr. Mary Kerr, Mr. Peter
Guenter, Mr. Daniel O’Day, Dr. Linda Higgins, Dr. Elisabeth Svanberg, Mr. Jérôme
Contamine and Dr. Dan Baker.
At the Annual Shareholders’ Meeting of 26 April 2022, the mandates of Howard Rowe and
Katrine Bosley as members of the Board of Directors came to an end.
Effective from 1 January 2020, Galapagos no longer grants any subscription rights to
members of the Board of Directors, taking into account the stricter rules of the Belgian
Companies Code. Prior to 2020, Board members were granted subscription rights.
Effective from 26 April 2022, our new CEO, Stoffels IMC BV, permanently represented
by Dr. Paul Stoffels, has been appointed as the Chairman of the Board of Directors
225
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
of Galapagos. The CEO will only be remunerated for the performance of its executive
functions as CEO and is not entitled to any additional remuneration for its mandates of
Chairman of the Board of Directors or of any Committee.
Dr. Hoekema retired from Galapagos and was our Chief Business Officer and an Executive
Committee member until 31 October 2022 and hence the table below for financial year
2022 contains disclosures on his remuneration until the aforementioned date.
Dr. Walid Abi-Saab departed Galapagos and was our Chief Medical Officer and an
Executive Committee member until 31 December 2022; hence the table below for
financial year 2022 contains disclosures on his remuneration.
Reference is made to the Remuneration Report, which discloses the remuneration
awarded to each member of the Board of Directors and Executive Committee during
2022.
The remuneration package of the members of key management personnel comprises:
Thousands of € (except for the number of subscription rights and RSUs)
2022
2021
Year ended 31 December
Remuneration of key management personnel:
Short-term benefits
Executive Committee members as a group(1)
Gross salary
Cash bonus(2)
Other short-term benefits
Long-term benefits for Executive Committee members as a group(3)
Board fees and other short-term benefits for members of the
Board of Directors
Stofffels IMC BV (permanently represented by Dr. Paul Stoffels)
Raj Parekh
Howard Rowe(4)
Katrine Bosley(4)
Mary Kerr
Peter Guenter
Jérôme Contamine(5)
Dan Baker(5)
Elizabeth Svanberg
Daniel O’Day(6)
Linda Higgins(6)
3,444
4,264
2,341
997
106
-
165
39
21
115
115
102
68
115
-
-
2,621
1,172
471
-
220
120
65
115
115
115
-
-
226
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Year ended 31 December
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
Executive Committee members as a group(1)
Onno van de Stolpe
Stofffels IMC BV (permanently represented by Dr. Paul Stoffels)
Bart Filius
Piet Wigerinck
Andre Hoekema
Walid Abi-Saab
Michele Manto
Total number of subscription rights granted in the year
Total cost of subscription rights granted in the year under IFRS 2
Number of RSUs granted in the year(9)
Onno van de Stolpe
Stofffels IMC BV (permanently represented by Dr. Paul Stoffels)
Bart Filius
Piet Wigerinck
Andre Hoekema
Walid Abi-Saab
Michele Manto
2022
240
4,424
1,124,000
-
1,000,000
68,000
-
-
32,000
24,000
1,124,000
27,010
-
74,408
61,442
-
-
37,274
27,354
2021
399
5,413
802
275,000
85,000
50,000
40,000
30,000
40,000
30,000
275,000
5,629
63,830
62,730
835
51,433
44,038
31,694
Total number of RSUs granted in the year
200,478
254,657
(1) Dr. Wigerinck was a member of the Executive Committee (formerly Management Board) until 30 November 2021. His remuneration and
benefits are included in the overview for the financial year 2021. Mr. Onno Van de Stolpe was our CEO and Executive Committee member
until 31 March 2022, Dr Andre Hoekema was our CBO and Executive Committee member until 31 October 2022 and Dr. Walid Abi-Saab was
our CMO and Executive Committee member until 31 December 2022. Their (prorated) remuneration and benefits are included in the
overview for the financial year 2021 and 2022. Effective as of 1 April 2022, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) is
our CEO and Chair of the Executive Committee. His remuneration is included in the overview for the financial year 2022.
(2) The aggregate number under financial year 2022 also includes the cash bonus of Dr. Andre Hoekema and Dr. Walid Abi-Saab. The aggregate
number under 2021 also includes the cash bonus of Dr. Wigerinck.
(3) Only Executive Committee 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 financial year 2021 the deferred part of the bonus is not paid out. As of 2019 the Senior
Management Bonus Scheme was no longer applicable, as a result 2021 was the last financial year during which such payment could occur.
(4) Member of the Board of Directors until 26 April 2022.
(5) Member of the Board of Directors as of 26 April 2022.
(6) Gilead designees appointed to our Board of Directors on 22 October 2019. They don’t receive any remuneration for their Board mandate.
(7) Only Executive Committee members receive post-employment benefits.
(8) For 2021 we disclose Dr. Wigerinck’s severance package.
(9) This is the sum of the RSUs awarded during the respective financial year, excluding the RSUs representing the deferred portion of the
bonus for 2021 in FY2021 and for 2022 in FY2022 (each time to be granted in the following financial year). Only Executive Committee
members were awarded RSUs.
227
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Other
No loans, quasi-loans or other guarantees were given by Galapagos NV or any of its
subsidiaries to members of the Board of Directors and of the Executive Committee. 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 Executive Committee and the Board of
Directors.
33. Consolidated companies as of 31 December 2022
Name of the subsidiary
AboundBio Inc.
CellPoint B.V.
Country
United States
The Netherlands
Galapagos Biopharma Belgium BV
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
Galapagos Biopharma Denmark ApS
Galapagos Biopharma Austria GmbH
Galapagos Biopharma Ireland Ltd
Galapagos Biotech Ltd
Galapagos B.V.
Galapagos GmbH
Galapagos, Inc.
Galapagos NV
Galapagos Real Estate Belgium BV
Sweden
Norway
Finland
Denmark
Austria
Ireland
United Kingdom
The Netherlands
Switzerland
United States
Belgium
Belgium
Galapagos Real Estate Netherlands B.V.
The Netherlands
Galapagos SASU
Xenometrix, Inc. in liquidation
France
United States
% voting right
Galapagos NV
(directly or indirectly
through subsidiaries)
Change in % voting
right previous period
(2022 vs 2021)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Parent company
100%
100%
100%
100%
In 2022, we acquired all of the issued and outstanding shares in CellPoint and
AboundBio.
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.
228
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
34. 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 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
2022
2021
Current financial investments
1,292,514
1,317,460
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
Financial liabilities held at fair value through profit or loss
Current financial instruments
Current contingent consideration related to milestones CellPoint
Non-current contingent consideration related to milestones CellPoint
Financial liabilities at amortized cost
Trade liabilities
Lease liabilities
Current deferred consideration payable CellPoint
2,293,431
508,117
4,569
1,209
28,194
1,152,349
2,233,368
1,425
1,048
91,786
4,128,033
4,797,436
19
8,485
13,582
68,928
21,901
6,222
204
-
-
84,519
26,859
-
Total financial liabilities
119,137
111,582
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.
229
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 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 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
investments and cash and cash equivalents amounted to
financial
€4,094.1 million on 31 December 2022. 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 product sales,
royalties, 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.
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.
230
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 is no history of material credit losses 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
2022
424
208
473
2021
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.
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 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 €40.9 million (2021: €47.0 million); a 100
basis points decrease in interest rates would have decreased profit or loss, and equity,
by approximately €40.9 million (2021: €47.0 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
functional currency is euro, but we receive payments from our main
principal
collaboration partner Gilead in U.S. dollars and acquire some consumables and
materials in U.S. dollars, Swiss francs, and GB pounds.
231
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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 collaboration 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
2022
(85,140)
960
557
2021
(83,996)
1,093
233
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
investments, cash and cash
equivalents, 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.
financial
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.
35. Statutory auditor’s remuneration
The statutory auditor’s fees for carrying out its mandate at group level amounted to
€ 1,127.1 thousand in 2022 (2021: €860.3 thousand). Audit-related fees, which generally
the auditor provides, amounted to €26.9 thousand in 2022 (2021: €101.1 thousand).
Other fees related to non-audit services executed by the statutory auditor amounted
232
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
to €0 in 2022 (2021: €0). Other fees related to non-audit services executed by persons
related to the statutory auditor amounted to €429.5 thousand in 2022 and related to
advisory services in relation to IT and quality management (2021: €587.7 thousand). The
Audit Committee and the Board of Directors 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 and Associations
Code.
36. Events after balance sheet date
On 8 February 2023, we announced topline results from Phase 3 DIVERSITY trial of
filgotinib in CD and our decision not to submit a Marketing Authorization Application in
Europe based on these topline results. By consequence, we expect a decrease to the
total estimated remaining costs for us to complete the filgotinib development, resulting
in a positive catch up of revenues in 2023. At the time of the issuance of this annual
report, our re-assessment of the estimated remaining costs is still ongoing. If our best
estimate of the remaining cost to complete the filgotinib performance obligation would
be decreased by 15% to 25%, this would result in an increase in revenue recognition in
2023 of €50 million to €86 million, and a corresponding decrease in current and non-
current deferred income.
On 20 March 2023, 61,560 subscription rights were exercised (with an average exercise
price of €28.75 per subscription right). This resulted in a share capital increase (including
issuance premium) of €1,769,850, and the issuance of 61,560 new ordinary shares as per
20 March 2023. The closing price of our share on Euronext Brussels and Amsterdam on
20 March 2023 was €35.47.
Our consolidated financial statements were approved by the Board of Directors, and
authorized for publication on 21 March 2023. They were signed on behalf of the Board of
Directors by:
(signed)
Stoffels IMC BV
permanently represented by Dr. Paul Stoffels
Chairman of the Board of Directors
Jérôme Contamine
Chairman of the Audit Committee and member of the Board of Directors
21 March 2023
233
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
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
CEO and Chairman.
Income statement
(thousands of €)
Turnover
Inventory semi-finished and finished goods : increase (decrease)
Internally generated intangible assets
Other operating income
Non-recurring operating income
Year ended 31 December
2022
418,495
4,414
349,508
12,847
19
2021
503,390
1,376
392,744
18,535
-
Operating income
785,283
916,046
Raw materials, consumables and goods for resale
Services and other goods
Remuneration, social security costs and pensions
Depreciation, impairment and other amounts written off on constitution
costs, intangible and tangible assets
Increase (-)/decrease in provisions
Other operating charges
Non-recurring operating costs
Operating loss
Finance income
Non-recurring finance income
Finance cost
Non-recurring finance cost
Loss before tax
Taxes
Loss for the year
Loss brought forward
(19,860)
(420,835)
(77,772)
(357,368)
(2,105)
(102,149)
(36,854)
(13,058)
(500,012)
(70,360)
(401,835)
2,317
(120,704)
(4,068)
(231,661)
(191,674)
135,554
-
(60,964)
-
85,765
33,471
(28,125)
(12,330)
(157,071)
(112,893)
19,092
20,156
(137,980)
(92,737)
(369,237)
(276,499)
Accumulated losses to be carried forward
(507,217)
(369,237)
234
Galapagos NV Annual Report 2022
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
Trade and other payables
Tax, payroll and social security liabilities
Accrued costs
Deferred income
Total equity and liabilities
31 December
2022
2021
375,525
18,165
17,595
251,918
87,847
4,318,923
52,665
154,704
9,755
10,711
4,091,087
4,694,448
2,508,640
356,112
2,659,745
(507,217)
2,185,808
9,752
9,752
-
2,176,057
274,599
25,642
658
1,875,157
4,694,448
199,804
48,290
15,697
43,317
92,500
4,920,628
20,361
209,445
8,677
847
4,681,298
5,120,433
2,639,924
354,582
2,654,579
(369,237)
2,480,508
10,385
8,885
1,500
2,470,123
223,911
16,705
3,100
2,226,407
5,120,433
from
Galapagos NV’s operating income decreased by €130.7 million in 2022,
€916.0 million in 2021 to €785.3 million in 2022. This decrease was due to a lower
turnover of €84.9 million, primarily due to decreased revenue recognition of upfront
payments, because of the lower increase in percentage of completion, as well as lower
revenue recognition of milestone payments. There was also a decrease due to internally
generated intangible assets – being capitalized R&D expenses – which contributed by
€43.2 million less to our operating income than previous year. Other operating income
decreased with €5.7 million and amounted to €12.8 million for the year ended
31 December 2022, including €1.8 million of grants recognized for R&D projects and
€8.5 million recuperation of withholding taxes for scientists.
The operating costs of 2022 amounted to €1,016.9 million compared to €1,107.7 million
in 2021.
Material purchases increased from €13.1 million in 2021 to €19.9 million in 2022.
235
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
Services and other goods decreased substantially to €420.8 million compared to
€500.0 million in 2021, primarily due to decreased internal and external subcontracting
for our preclinical studies and clinical trials.
Personnel costs in 2022 increased to €77.8 million compared to €70.4 million in 2021,
mainly due increased severance payments. The number of employees at Galapagos NV
at the end of 2022 amounted to 442 as compared to 460 at the end of 2021, excluding
insourced personnel. The average number of FTE in 2022 decreased to 433, compared to
487 in 2021.
Depreciation decreased to €357.4 million in 2022, compared to €401.8 million in 2021,
and related primarily to amortization of capitalized R&D expenses. Galapagos NV
capitalizes its incurred R&D expenses and fully amortizes them in the same year.
Other operating charges decreased from €120.7 million in 2021 to €102.1 million in 2022
caused by a reduction in transferpricing management fees. Non-recurring operating
costs consisted of impairments of intangible fixed assets related to discontinued
projects.
Galapagos NV’s 2022 financial
income increased to €135.6 million compared to
€85.8 million in 2021, financial costs increased as well to €61.0 million compared to
€28.1 million in 2021. The net exchange gain decreased from €74.0 million in 2021 to
€54.9 million in 2022 and consisted mainly of non-realized currency exchange gains on
U.S. dollar, while the net interest income in 2022 amounted to €10.8 million as compared
to a net interest cost of €11.4 million in 2021. Financial income also included dividend
income of €10.5 million. 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 2022 of €19.1 million as compared to €20.2 million tax income in
2021, related to tax incentives for investments in intangible fixed assets.
Investments in fixed assets in 2022 amounted to €17.0 million, excluding the internally
generated assets. They consisted mainly of investments in intangible assets, being a
license and milestone payment and software, as well of costs for building improvements,
new laboratory and IT equipment.
Non-current and current other receivables amounted to respectively €87.8 million and
€82.4 million and included the receivable for tax incentives amounting to respectively
€87.8 million and €14.2 million in 2022, compared to other receivables for tax incentives
of €92.5 million and €6.6 million in 2021.
Galapagos NV’s cash position at the end of 2022 amounted to €4,091.1 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
2022 closed with a loss of €138.0 million compared to a loss of €92.7 million in 2021.
236
Galapagos NV Annual Report 2022
FINANCIAL STATEMENTS
The non-consolidated annual accounts of Galapagos NV show accumulated losses of
€507.2 million as at 31 December 2022; we refer to the Going concern statement for
justification for the application of the valuation rules under the going concern
assumption.
In 2022, Galapagos NV did not make use of financial instruments.
Following common practice, Galapagos NV has given customary representations and
warranties which are capped and limited in time.
237
Galapagos NV Annual Report 2022
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 2022 – 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.
in accordance with the proposal of
We were appointed in our capacity as statutory auditor by the shareholders’ meeting
of 28 April 2020,
the board of directors
(“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 17 consecutive periods. We are the statutory auditor of Galapagos NV for
23 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 2022, 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 4 734 351 (000) EUR
and the consolidated statement of income and comprehensive income/loss shows a loss
for the year then ended of 217 991 (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 2022 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.
238
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
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
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 board of directors 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 filgotinib performance
obligation under the license and collaboration
agreement with Gilead – 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 174,4 million EUR in 2022 from upfront
payments and milestone payments related to the filgotinib performance obligation
under the license and collaboration agreement with Gilead (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. 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
239
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
consideration for our conclusion that procedures relating to the determination of the
estimated costs to complete the performance obligation,
impacting the revenue
recognition for 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 audit procedures related to the determination of the estimated costs impacting
the percentage of completion used for revenue recognition related to the filgotinib
performance obligation under the license and collaboration agreement with Gilead
included the following, among others:
We evaluated and tested 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.
We tested, on a sample basis, the accuracy and completeness of actual costs
incurred to date.
Our procedures on the reasonableness of the assumptions also included evaluating
management’s ability to reasonably estimate costs to complete the performance
obligation. Specifically, we:
Evaluated the appropriateness of changes made during the period to
management’s estimates of total costs to complete.
Performed a comparison of management’s prior period cost estimates to actual
costs incurred and approved.
Evaluated the period over which management is expecting the company to
complete its performance obligation.
Compared certain costs to third-party supporting evidence.
Considered the impact of any subsequent events on management’s
assumptions.
Accounting for Business Combinations – Cellpoint
B.V. – Refer to notes 3, 4, 12, 13, 24 and 26 to the
consolidated financial statements
Key Audit Matter Description
The company entered into an agreement to acquire CellPoint B.V. (“Cellpoint”) in June
2022, where the company acquired 100 percent of the outstanding shares and voting
interests in an all-cash transaction.
We identified the valuation of acquired in-process research and development (“IPR&D”)
and the valuation of the collaboration agreement for the exclusive right to use the Lonza
Cocoon® manufacturing platform, in addition to the contingent consideration liability
recognized in connection with the acquisition of CellPoint, as a key audit matter because
240
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
of the judgments necessary for management to estimate the acquisition date fair value
of such balances.
The significant assumptions used to estimate the fair value of the acquired IPR&D,
collaboration agreement for the exclusive right to use the Lonza Cocoon® manufacturing
platform, and contingent consideration included discount rates, as well as certain other
business-related assumptions that form the basis of
forecasted financial results,
including probability of success factors and revenue forecasts. Given the complexity
of these assumptions this matter required a high degree of auditor judgment, and
increased extent of effort
including involvement of valuation specialists, when
performing audit procedures and evaluating the results of those procedures.
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the company’s accounting for the IPR&D, collaboration
agreement for the exclusive right to use the Lonza Cocoon® manufacturing platform
and the contingent consideration liability recognized in connection with the CellPoint
acquisition, included the following, among others:
We tested the effectiveness of the company’s controls associated with accounting for
business combinations.
We assessed the reasonableness of management’s key estimates and assumptions
used in the valuation models. We met with key individuals from the senior leadership
team and key personnel involved to discuss and evaluate management’s evidence to
support the relevant assumptions.
With the assistance of our valuation specialists, we evaluated the reasonableness
of the valuation methodologies used to determine the value of the acquired IPR&D,
collaboration agreement
to use the Lonza Cocoon®
the exclusive right
manufacturing platform, and contingent consideration liability, including testing the
mathematical accuracy of the calculations, the discount rate, and company specific
risks.
for
Responsibilities of the board of directors for the preparation
of the consolidated financial statements
The board of directors 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 board of
directors 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 board of directors 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 board of directors either intends to liquidate the group or to cease
operations, or has no other realistic alternative but to do so.
241
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
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 board
of directors in the way that the company’s business has been conducted or will be
conducted.
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 board of directors;
conclude on the appropriateness of the use of the going concern basis of accounting
by the board of directors 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;
242
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
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.
Other legal and regulatory requirements
Responsibilities of the board of directors
The board of directors 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.
243
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
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.
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”).
The board of directors is responsible for the preparation, in accordance with the ESEF
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.
244
Galapagos NV Annual Report 2022
REPORT OF THE STATUTORY AUDITOR
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 2022 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, 23 March 2023.
The statutory auditor
Deloitte Bedrijfsrevisoren/Réviseurs d’Entreprises BV/SRL
Represented by Nico Houthaeve
245
Galapagos NV Annual Report 2022
OTHER INFORMATION
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
ATALANTA-1
Phase 1/2 study in relapsed/refractory non-Hodgkin lymphoma (rrNHL) with CD19/
4-1BB CAR-T candidate, GLPG5101, manufactured at point-of-care
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
246
Galapagos NV Annual Report 2022
OTHER INFORMATION
Antibody
A blood protein produced in response to and counteracting a specific antigen.
Antibodies combine chemically with substances which the body recognizes as alien,
such as bacteria, viruses, and foreign substances
Assays
Laboratory tests to determine characteristics
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
Axial spondyloarthritis (AxSpA)
Axial spondyloarthritis (axSpA) is a type of arthritis. It mostly causes pain and swelling
in the spine and the joints that connect the bottom of the spine to the pelvis (sacroiliac
joint). Other joints can be affected as well. It is a systemic disease, which means it may
affect other body parts and organs. The disease tends to run in families
BCMA
B cell maturation antigen (BCMA) is a member of the tumor necrosis factor receptor
superfamily that plays an important role in regulating B-cell proliferation and survival.
BCMA is central to the survival of multiple myeloma cells
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
Biological
Biological therapeutics, also referred to as Biologicals, are those class of medicines
which are grown and then purified from large-scale cell cultures of bacteria or yeast,
or plant or animal cells. Biologicals are a diverse group of medicines which includes
vaccines, growth factors,
immune modulators, monoclonal antibodies, as well as
products derived from human blood and plasma. What distinguishes biologicals from
other medicines is that these are generally proteins purified from living culture systems
or from blood, whereas other medicines are considered as 'small molecules' and are
either made synthetically or purified from plants
247
Galapagos NV Annual Report 2022
OTHER INFORMATION
Biomarker
Substance used as an indicator of a biological process, particularly to determine whether
a product candidate has a biological effect
Bispecific antibody
An antibody that binds to two different antigens
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
CAR-T
Chimeric antigen receptor T cells (also known as CAR-T cells) are T cells that have been
genetically engineered to produce an artificial T cell receptor for use in immunotherapy
CD19
CD19 is a protein found on the surface of B-cells, a type of white blood cell. Since CD19 is
a hallmark of B-cells, the protein has been used to diagnose cancers that arise from this
type of cell - notably B-cell lymphomas
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 CFTR channel might reduce cyst growth and enlargement for patients
with ADPKD. GLPG2737 is a CFTR inhibitor
248
Galapagos NV Annual Report 2022
OTHER INFORMATION
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
CIR 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
Cell therapy
Cell therapy aims to treat diseases by restoring or altering certain sets of cells or by
using cells to carry a therapy through the body. With cell therapy, cells are cultivated or
modified outside the body before being injected into the patient. The cells may originate
from the patient (autologous cells) or a donor (allogeneic cells)
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
Chronic Lymphocytic Leukemia (CLL)
Chronic lymphocytic leukemia is the most common leukemia in adults. It is a type of
cancer that starts in cells that become certain white blood cells (called lymphocytes) in
the bone marrow. The cancer (leukemia) cells originate in the bone marrow and migrate
to the bloodstream
249
Galapagos NV Annual Report 2022
OTHER INFORMATION
Clinical Proof of Concept (PoC)
Point in the drug development process where the product candidate demonstrates for
the first time a response 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
Complete Response Rate (CRR)
Term used for the absence of all detectable cancer after the treatment is completed
Compound
A chemical substance, often a small molecule with drug-like properties
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,
bleeding, and ultimately in some cases surgical removal of parts of the bowel
leading to pain,
Cryopreservation
Process where biological material - cells, tissues, or organs - are frozen to preserve the
material for an extended period of time
Cytokine
A category of small proteins which play important roles in signaling in processes in the
body
Cytokine release syndrome (CRS)
Condition that develops when your immune system responds too aggressively to
infection or after certain types of immunotherapy, such as CAR-T-cell therapy
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
250
Galapagos NV Annual Report 2022
OTHER INFORMATION
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 200mg filgotinib, except for U.S.
males who are on 100mg. 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
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
Dermatomyositis (DM)
Dermatomyositis is a rare inflammatory disease. Common symptoms include distinctive
skin rash, and inflammatory myopathy, or inflamed muscles, causing muscle weakness
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
251
Galapagos NV Annual Report 2022
OTHER INFORMATION
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,
medications
in charge of European market authorization of new
EUPLAGIA-1
EUPLAGIA-1 Phase 1/2 study with point-of-care manufactured CD19 CAR-T candidate,
GLPG5201, in patients with replapsed/ refractory chronic lymphocytic leukemia (rrCLL)
and small lymphocytic lymphoma (rrSLL), with or without Richter’s transformation (RT)
Efficacy
Effectiveness for intended use
End-to-end
A process that takes a system or service from beginning to end and delivers a complete
functional solution, usually without strong reliance on third parties
Endoscopy
A non-surgical procedure involving use of an endoscope to examine a persons digestive
tract
252
Galapagos NV Annual Report 2022
OTHER INFORMATION
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 Autoriteitvoor
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
253
Galapagos NV Annual Report 2022
OTHER INFORMATION
Filgotinib
Formerly known as GLPG0634, commercial name is Jyseleca®. Small molecule
preferential JAK1 inhibitor, approved in RA and UC in Europe and Japan. Phase 4 studies
are ongoing in both RA and UC
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
GLPG0555
A JAK1 inhibitor in Phase 1b. Development was stopped in July 2022
GLPG0634
Molecule number currently known as filgotinib and Jyseleca®
GLPG2737
A compound evaluated 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 in Phase 1 targeting JAK1/TYK2 directed toward inflammation (IBD).
Development was stopped in July 2022
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 evaluated in multiple Phase 2 proof-of-concept studies. Topline results
from the studies in UC, psoriasis and RA were reported in July 2021. The compound was
discontinued in March 2022
254
Galapagos NV Annual Report 2022
OTHER INFORMATION
GLPG4399
A SIK3 inhibitor in Phase 1 directed toward inflammation. The developent was halted in
2022
GLPG4586
A compound with undisclosed mode of action in preclinical phase directed toward
fibrosis and inlicensed from Fibrocor. The Development was stopped in July 2022
GLPG4605
A SIK2/3 inhibitor in the preclinical phase, currently directed toward fibrosis. The
developent was halted in 2022
GLPG4716
A chitinase inhibitor inlicensed from Molecure (previously OncoArendi). The rights to the
molecule have been returned to Molecure in July 2022
GLPG5101
A second generation anti-CD19/4-1BB CAR-T product candidate currently in Phase 1/2
study in rrNHL
GLPG5201
A second generation anti-CD19/4-1BB CAR-T product candidate currently in Phase 1/2
study in rrCLL/SLL with or wthout RT
GLPG5301
A BCMA CAR-T product candidate
Genome
An organism's complete set of genetic information needed to build that organism and
allow it to grow and develop
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
255
Galapagos NV Annual Report 2022
OTHER INFORMATION
prognosis. The term “idiopathic” is used because the cause of pulmonary fibrosis is still
unknown
Immune effector cell-associated neurotoxicity syndrome
(ICAN)
Clinical and neuropsychiatric syndrome that can occur in the days to weeks following
administration of certain types of immunotherapy, especially immune effector cell (IEC)
and T cell engaging therapy
Immunology
The study of the immune system and is a very important branch of the medical and
biological sciences. The immune system protects humans from infection through various
lines of defence. If the immune system is not functioning as it should, it can result in
disease, such as autoimmunity, allergy and cancer
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
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 an experimental drug across state lines, usually to clinical investigators, before a
marketing 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
256
Galapagos NV Annual Report 2022
OTHER INFORMATION
Jyseleca®
Jyseleca® is the brand name for filgotinib
LDL
Low-density lipoprotein. LDL contributes to heart disease at high levels
Leukapheresis
Laboratory procedure in which white blood cells are separated from a sample of blood
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
cardiovascular research
frequently used in
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), in charge of Japanese market
authorization of new medications
MHRA
Medicines and Healthcare products Regulatory Agency in Great Britain
257
Galapagos NV Annual Report 2022
OTHER INFORMATION
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, including stool frequency, rectal bleeding, findings of flexible
proctosigmoidoscopy or colonoscopy, and physician's global assessment, with a total
score ranging from 0 to 12
Milestone
Major achievement in a project or program; in our alliances, this is usually associated
with a payment
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
Multiple myeloma (MM)
Multiple myeloma (MM) is typically characterized by the neoplastic proliferation of
plasma cells producing a monoclonal immunoglobulin. The plasma cells proliferate in
the bone marrow and can result in extensive skeletal destruction with osteolytic lesions,
osteopenia, and/or pathologic fractures.
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
Non-Hodgkin's lymphoma (NHL)
Non-Hodgkin's lymphoma is a type of cancer that begins in the lymphatic system, which
is part of the body's germ-fighting immune system. In non-Hodgkin's lymphoma, white
blood cells called lymphocytes grow abnormally and form tumors throughout the body
258
Galapagos NV Annual Report 2022
OTHER INFORMATION
Objective Response Rate (ORR)
The response rate is the percentage of patients on whom a therapy has some defined
effect; for example, the cancer shrinks or disappears after treatment. When used as
a clinical endpoint for trials of cancer treatments, this is often called the objective
response rate
Oncology
Field of medicine that deal with the diagnosis, treatment, prevention, and early
detection of cancer
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
PAPILIO-1
Phase 1/2 study with GLPG5301 in patients with relapsed/refractory multiple myeloma
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
259
Galapagos NV Annual Report 2022
OTHER INFORMATION
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
Pivotal trials
Registrational clinical trials
Placebo
A substance having no pharmacological effect but administered as a control in testing a
biologically active preparation
Point-of-care
Drug treatment is provided close to or near the patient
Preclinical
Stage of drug research development, undertaken prior to the administration of the drug
to humans. Consists of invitroand invivoscreening, 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
260
Galapagos NV Annual Report 2022
OTHER INFORMATION
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
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
Refractory
"Refractory" refers to a patient with cancer that is/has become resistant to, or does not
respond to, treatment
Relapsed
"Relapsed" refers to a patient with cancer that develops cancer again after a period of
improvement
Rheumatoid arthritis (RA)
A chronic, systemic inflammatory disease that causes joint inflammation, and usually
leads to cartilage destruction, bone erosion and disability
Richter's transformation
Richter's Transformation (RT) is an uncommon clinicopathological condition observed
in patients with CLL. It is characterized by the sudden transformation of the CLL into a
significantly more aggressive form of large cell lymphoma, and occurs in approximately
2-10% of all CLL patients.
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
261
Galapagos NV Annual Report 2022
OTHER INFORMATION
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)
SIK
Salt-inducible kinase
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
Small cell lymphocyte leukemia (SLL)
Small cell lymphocyte leukemia is a type of B-cell non-Hodgkin lymphoma, where the
SLL cancer is located in lymp nodes and/or the spleen
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 (SLE)
An autoimmune disease, with systemic manifestations including skin rash, erosion of
joints or even kidney failure
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
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
Protein 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
262
Galapagos NV Annual Report 2022
OTHER INFORMATION
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)
Topical corticosteroids
Corticosteroids which are administered through the skin using an ointment
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 (VTE)
When a blood clot breaks loose and travels in the blood. The abbreviation DVT/PE refers
to a VTE where a deep vein thrombosis (DVT) has moved to the lungs (PE or pulmonary
embolism)
263
Galapagos NV Annual Report 2022
OTHER INFORMATION
Financial calendar
25 April 2023
Annual Shareholders’ Meeting in Mechelen, Belgium
04 May 2023
First quarter 2023 results
03 August 2023
First half year 2023 results
02 November 2023
Third quarter 2023 results
22 February 2024
Full year 2023 results
264
Galapagos NV Annual Report 2022
OTHER INFORMATION
Appendix tables – EU taxonomy
Proportion of turnover from products or services associated with Taxonomy-aligned economic –
2022
Substantial contribution criteria
DNSH criteria ('Does Not
Significantly Harm')
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
(
5
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
6
)
P
r
o
p
o
r
t
i
o
n
o
f
t
u
r
n
o
v
e
r
(
4
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
r
e
s
o
u
r
c
e
s
(
7
)
l
A
b
s
o
u
t
e
t
u
r
n
o
v
e
r
(
3
)
C
i
r
c
u
l
a
r
e
c
o
n
o
m
y
(
8
)
P
o
l
l
u
t
i
o
n
(
9
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
e
c
o
s
y
s
t
e
m
s
(
1
0
)
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
(
1
1
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
1
2
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
r
e
s
o
u
r
c
e
s
(
1
3
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
e
c
o
s
y
s
t
e
m
s
(
1
6
)
C
i
r
c
u
l
a
r
e
c
o
n
o
m
y
(
1
4
)
P
o
l
l
u
t
i
o
n
(
1
5
)
Taxo-
nomy-
aligned
pro-
portion
of
turn-
over,
year
N-1
(19)
Taxo-
nomy-
aligned
pro-
portion
of
turn-
over,
year N
(18)
Cate-
gory
(en-
abling
activity
or)
(20)
Cate-
gory
(transi-
tional
activity)
(21)
i
i
M
n
m
u
m
s
a
f
e
g
u
a
r
d
s
(
1
7
)
%
%
%
%
%
% Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N
%
%
E
T
In
thousands
of €
N/A
N/A
N/A
505,280 100%
505,280 100%
Economic activities (1)
C
o
d
e
(
s
)
(
2
)
A.
TAXONOMY-ELIGIBLE
ACTIVITIES
Turnover of
environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
Turnover of Taxonomy-
eligible but not
environmentally
sustainable activities (not
Taxonomy-aligned
activities) (A.2)
Total (A.1 + A.2)
B.
TAXONOMY-NON-ELIGIBLE
ACTIVITIES
Turnover of Taxonomy-
non-eligible activities (B)
Total (A + B)
(1) We disclose the tables in accordance with Annex II of Article 8 Climate Delegated Act and Article 2 of the Complementary Climate Delegated Act, although Galapagos concluded that
our core economic activities qualify as taxonomy-non-eligible activities (concurrently resulting in the absence of any taxonomy-eligible activities) and nil alignment with the
environmental objectives listed under the EU Taxonomy Regulation; hence we consider the informational value of this tables minimal. In addition, Galapagos does not perform any
fossil gas and nuclear energy related activities, as covered by the Complementary Climate Delegated Act.
265
Galapagos NV Annual Report 2022
OTHER INFORMATION
Proportion of CapEx from products or services associated with Taxonomy-aligned economic
activities – 2022
Economic activities
C
o
d
e
(
s
)
(
2
)
A. TAXONOMY-ELIGIBLE
ACTIVITIES
A.1. Environmentally
sustainable activities
(Taxonomy-aligned)
CapEx of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
A.2 Taxonomy-eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned
activities)
CapEx of Taxonomy-
eligible but not
environmentally
sustainable activities (not
Taxonomy-aligned
activities) (A.2)
Total (A.1 + A.2)
B. TAXONOMY-NON-
ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-
eligible activities (B)
Total (A + B)
Substantial contribution criteria
DNSH criteria ('Does Not
Significantly Harm')
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
(
5
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
6
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
r
e
s
o
u
r
c
e
s
(
7
)
P
r
o
p
o
r
t
i
o
n
o
f
C
a
p
E
x
(
4
)
l
A
b
s
o
u
t
e
C
a
p
E
x
(
3
)
C
i
r
c
u
l
a
r
e
c
o
n
o
m
y
(
8
)
P
o
l
l
u
t
i
o
n
(
9
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
e
c
o
s
y
s
t
e
m
s
(
1
0
)
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
(
1
1
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
1
2
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
r
e
s
o
u
r
c
e
s
(
1
3
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
e
c
o
s
y
s
t
e
m
s
(
1
6
)
C
i
r
c
u
l
a
r
e
c
o
n
o
m
y
(
1
4
)
P
o
l
l
u
t
i
o
n
(
1
5
)
Taxo-
nomy-
aligned
pro-
portion
of
CapEx,
year
N-1
(19)
Taxo-
nomy-
aligned
pro-
portion
of
CapEx,
year N
(18)
Cate-
gory
(en-
abling
activity
or)
(20)
Cate-
gory
(transi-
tional
activity)
(21)
i
i
M
n
m
u
m
s
a
f
e
g
u
a
r
d
s
(
1
7
)
%
%
%
%
%
% Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N
%
%
E
T
In
thousands
of €
N/A
N/A
N/A
N/A
N/A
170,015 100%
170,015 100%
266
Galapagos NV Annual Report 2022
OTHER INFORMATION
Proportion of OpEx from products or services associated with Taxonomy-aligned economic
activities – 2022
Economic activities
C
o
d
e
(
s
)
(
2
)
A. TAXONOMY-ELIGIBLE
ACTIVITIES
A.1. Environmentally
sustainable activities
(Taxonomy-aligned)
OpEx of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
A.2 Taxonomy-eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned
activities)
OpEx of Taxonomy-eligible
but not environmentally
sustainable activities (not
Taxonomy-aligned
activities) (A.2)
Total (A.1 + A.2)
B. TAXONOMY-NON-
ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-
eligible activities (B)
Total (A + B)
Substantial contribution criteria
DNSH criteria ('Does Not
Significantly Harm')
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
(
5
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
6
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
r
e
s
o
u
r
c
e
s
(
7
)
P
r
o
p
o
r
t
i
o
n
o
f
O
p
E
x
(
4
)
l
A
b
s
o
u
t
e
O
p
E
x
(
3
)
C
i
r
c
u
l
a
r
e
c
o
n
o
m
y
(
8
)
P
o
l
l
u
t
i
o
n
(
9
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
e
c
o
s
y
s
t
e
m
s
(
1
0
)
C
l
i
m
a
t
e
c
h
a
n
g
e
m
i
t
i
g
a
t
i
o
n
(
1
1
)
C
l
i
m
a
t
e
c
h
a
n
g
e
a
d
a
p
t
a
t
i
o
n
(
1
2
)
W
a
t
e
r
a
n
d
m
a
r
i
n
e
r
e
s
o
u
r
c
e
s
(
1
3
)
i
B
o
d
i
v
e
r
s
i
t
y
a
n
d
e
c
o
s
y
s
t
e
m
s
(
1
6
)
C
i
r
c
u
l
a
r
e
c
o
n
o
m
y
(
1
4
)
P
o
l
l
u
t
i
o
n
(
1
5
)
Taxo-
nomy-
aligned
pro-
portion
of
OpEx,
year
N-1
(19)
Taxo-
nomy-
aligned
pro-
portion
of
OpEx,
year N
(18)
Cate-
gory
(en-
abling
activity
or)
(20)
Cate-
gory
(transi-
tional
activity)
(21)
i
i
M
n
m
u
m
s
a
f
e
g
u
a
r
d
s
(
1
7
)
%
%
%
%
%
% Y/N Y/N Y/N Y/N Y/N Y/N Y/N Y/N
%
%
E
T
In
thousands
of €
N/A
N/A
N/A
N/A
N/A
515,083 100%
515,083 100%
267
Galapagos NV Annual Report 2022
OTHER INFORMATION
Nuclear and fossil gas related activities
Row
Nuclear energy related activities
1.
2.
3.
4.
5.
6.
The undertaking carries out, funds or has exposures to research, development, demonstration and
deployment of innovative electricity generation facilities that produce energy from nuclear
processes with minimal waste from the fuel cycle.
The undertaking carries out, funds or has exposures to construction and safe
operation of new nuclear installations to produce electricity or process heat, including
for the purposes of district heating or industrial processes such as hydrogen
production, as well as their safety upgrades, using best available technologies.
The undertaking carries out, funds or has exposures to safe operation of existing
nuclear installations that produce electricity or process heat, including for the
purposes of district heating or industrial processes such as hydrogen production from
nuclear energy, as well as their safety upgrades.
Fossil gas related activities
The undertaking carries out, funds or has exposures to construction or operation of
electricity generation facilities that produce electricity using fossil gaseous fuels.
The undertaking carries out, funds or has exposures to construction, refurbishment,
and operation of combined heat/cool and power generation facilities using fossil
gaseous fuels.
The undertaking carries out, funds or has exposures to construction, refurbishment
and operation of heat generation facilities that produce heat/cool using fossil gaseous
fuels.
NO
NO
NO
NO
NO
NO
268
Galapagos NV Annual Report 2022
OTHER INFORMATION
Taxonomy-aligned economic activities (denominator)
Amount and proportion (the information is to be presented in monetary
amounts and as percentages)
CCM + CCA
Climate change
mitigation
(CCM)
Climate change
adaptation
(CCA)
Row Economic activities
Amount
% Amount
% Amount
%
1.
2.
3.
4.
5.
6.
7.
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.26 of Annexes I and II to
Delegated Regulation 2021/2139 in the
denominator of the applicable KP
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.27 of Annexes I and II to
Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.28 of Annexes I and II to
Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.29 of Annexes I and II to
Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.30 of Annexes I and II to
Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.31 of Annexes I and II to
Delegated Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of other
taxonomy-aligned economic activities
not referred to in rows 1 to 6 above in
the denominator of the applicable KPI
8.
Total applicable KPI
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
269
Galapagos NV Annual Report 2022
OTHER INFORMATION
Taxonomy-aligned economic activities (numerator)
Amount and proportion (the information is to be presented in monetary
amounts and as percentages)
CCM + CCA
Climate change
mitigation
(CCM)
Climate change
adaptation
(CCA)
Row Economic activities
Amount
% Amount
% Amount
%
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.26 of Annexes I and II to
Delegated Regulation 2021/2139 in the
nominator of the applicable KP
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.27 of Annexes I and II to
Delegated Regulation 2021/2139 in the
nominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.28 of Annexes I and II to
Delegated Regulation 2021/2139 in the
nominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.29 of Annexes I and II to
Delegated Regulation 2021/2139 in the
nominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.30 of Annexes I and II to
Delegated Regulation 2021/2139 in the
nominator of the applicable KPI
Amount and proportion of taxonomy-
aligned economic activity referred to in
Section 4.31 of Annexes I and II to
Delegated Regulation 2021/2139 in the
nominator of the applicable KPI
Amount and proportion of other
taxonomy-aligned economic activities
not referred to in rows 1 to 6 above in
the nominator of the applicable KPI
Total amount and proportion of
taxonomy-aligned economic activities
in the numerator of the applicable KPI
1.
2.
3.
4.
5.
6.
7.
8.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
270
Galapagos NV Annual Report 2022
OTHER INFORMATION
Taxonomy-eligible but not taxonomy-aligned economic activities
Amount and proportion (the information is to be presented in monetary
amounts and as percentages)
CCM + CCA
Climate change
mitigation
(CCM)
Climate change
adaptation
(CCA)
Row Economic activities
Amount
% Amount
% Amount
%
Amount and proportion of taxonomy-
eligible but non taxonomy-aligned
economic activity referred to in Section
4.26 of Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KP
Amount and proportion of taxonomy-
eligible but non taxonomy-aligned
economic activity referred to in Section
4.27 of Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
eligible but non taxonomy-aligned
economic activity referred to in Section
4.28 of Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
eligible but non taxonomy-aligned
economic activity referred to in Section
4.29 of Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
eligible but non taxonomy-aligned
economic activity referred to in Section
4.30 of Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of taxonomy-
eligible but non taxonomy-aligned
economic activity referred to in Section
4.31 of Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of other
taxonomy-eligible but not taxonomy-
aligned economic activities not
referred to in rows 1 to 6 above in the
denominator of the applicable KPI
Total amount and proportion of
taxonomy eligible but not taxonomy-
aligned economic activities in the
denominator of the applicable KPI
1.
2.
3.
4.
5.
6.
7.
8.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
271
Galapagos NV Annual Report 2022
OTHER INFORMATION
Taxonomy non-eligible economic activities
Row Economic activities
Amount and proportion of economic
activity referred to in row 1 of Template
1 that is taxonomy-non-eligible in
accordance with Section 4.26 of
Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of economic
activity referred to in row 2 of Template
1 that is taxonomy-non-eligible in
accordance with Section 4.27 of
Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of economic
activity referred to in row 3 of Template
1 that is taxonomy-non-eligible in
accordance with Section 4.28 of
Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of economic
activity referred to in row 4 of Template
1 that is taxonomy-non-eligible in
accordance with Section 4.29 of
Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of economic
activity referred to in row 5 of Template
1 that is taxonomy-non-eligible in
accordance with Section 4.30 of
Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of economic
activity referred to in row 6 of Template
1 that is taxonomy-non-eligible in
accordance with Section 4.31 of
Annexes I and II to Delegated
Regulation 2021/2139 in the
denominator of the applicable KPI
Amount and proportion of other
taxonomy-non-eligible economic
activities not referred to in rows 1 to 6
above in the denominator of the
applicable KPI
Total amount and proportion of
taxonomy-non-eligible economic
activities in the denominator of the
applicable KPI
1.
2.
3.
4.
5.
6.
7.
8.
Turnover
CapEx
OpEx
Amount
Percentage
Amount
Percentage
Amount
Percentage
In
thousands
of €
In
thousands
of €
%
In
thousands
of €
%
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
505,280
100% 170,015
100% 515,083
100%
505,280
100% 170,015
100% 515,083
100%
272
Galapagos NV Annual Report 2022
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
Private photographs
Video
Deep Thought Productions
Cocoon® Platform footage courtesy of Lonza
Magazine Copy
Evelyn Fox
Copy deadline: 23 March 2023
This report is also available in Dutch and available for download in the Downloads
section of this report or at www.glpg.com
273
Galapagos NV Annual Report 2022
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
Elisa Chenailler
Head of Corporate Communication
Corporate Communications Manager
Galapagos NV
Generaal De Wittelaan L11 A3
2800 Mechelen, Belgium
Tel. +32 479 49 06 03
Galapagos NV
Aeschengraben 27
4051 Basel, Switzerland
Tel. +41 79 853 33 54
Email: communications@glpg.com
Email: communications@glpg.com
274
Galapagos NV Annual Report 2022