to transform
patient outcomes
Annual Report 2023
Pioneering science TABLE OF CONTENTS
Table of Contents
Our Business
Disclaimer and other information ...................... 4
Our Company ...................................................... 7
Key achievements in 2023 ................................ 15
Outlook 2024 ..................................................... 27
Going concern statement ................................. 27
Risk management and internal control ........... 28
Portfolio
Portfolio ............................................................. 31
Oncology ........................................................... 32
Immunology ...................................................... 50
Risk factors
Detailed description of the risk factors
in Form 20-F ...................................................... 61
Risks related to product development and
regulatory approval .......................................... 61
Risks related to commercialization .................. 65
Risks related to our financial position and
need for additional capital ............................... 66
Risks related to our reliance on third
parties ................................................................ 67
Risks related to our intellectual property ........ 71
Risks related to our competitive position ........ 73
Risks related to our organization, structure
and operation .................................................... 74
Market risks relating to the Galapagos
shares ................................................................ 79
General statement about Galapagos’ risks ...... 80
Sustainability report
Our Sustainability Commitment – Forward,
Sustainably ........................................................82
Our Ambition .....................................................83
Our Sustainability Governance .........................84
Our Double Materiality Assessment .................84
Our Pillars ..........................................................86
Reporting ...........................................................99
Appendix ..........................................................104
Corporate governance
Galapagos’ corporate governance policies ....114
Board of Directors of Galapagos NV ...............117
Committees .....................................................130
Executive Committee of Galapagos NV ..........134
Galapagos NV’s share capital and shares .......140
Shareholders ...................................................144
Our Remuneration Policy ................................148
Remuneration Report .....................................149
Conflict of interests and related parties .........168
Code of Conduct ..............................................171
Statement by the Board of Directors ..............172
Financial statements
Consolidated financial statements .................174
Notes to the consolidated financial
statements .......................................................179
Overview statutory results of Galapagos NV ..254
Report of the statutory auditor
Report of the statutory auditor .......................258
Other information
Glossary ...........................................................266
Financial calendar ...........................................277
Colophon .........................................................278
Contact ............................................................279
2
Galapagos NV Annual Report 2023
Our
Business
Overview of our company,
our strategy, and 2023 key
achievements
Pioneering science to
transform patient outcomes
OUR BUSINESS
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 printed or PDF version of the Annual Report 2023 and is a free
translation of the official Dutch language version in the European single electronic
format (ESEF) of the Annual Report 2023. The official Dutch language ESEF version of the
report prevails and is available on our website (www.glpg.com).
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
Email: 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 or PDF
document arise as a result of any electronic transmission. 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. Our annual report on Form 20-F is available in the SEC’s EDGAR database
(https://www.sec.gov/edgar.shtml), and a link thereto is posted on our website.
With the exception of filgotinib’s approval 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
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Galapagos NV Annual Report 2023
OUR BUSINESS
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.
Forward-looking statements
This annual report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of
the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based
on our management’s beliefs and assumptions and on information currently available to
our management. All statements other than present and historical facts and conditions
contained in this annual report, including statements regarding our future results of
operations and financial positions, business strategy, plans and our objectives for future
operations, are forward-looking statements. When used in this annual report, the words
“anticipate,” “believe,” “can,” “could,” “estimate,” “expect,” “intend,” “is designed to,”
“may,” “might,” “plan,” “potential,” “predict,” “objective,” “should,” or the negative of
these and similar expressions identify forward-looking statements.
Forward-looking statements contained in this report include, but are not limited to,
statements related to: the guidance from management regarding our financial results
and expected operational use of cash, statements regarding our strategic and capital
allocation priorities, statements regarding our regulatory outlook, business strategy and
statements regarding preliminary, interim and topline data from our preclinical and
clinical studies and any other data or analyses related to programs, and our plans and
strategy with respect to such studies, statements about our ability to advance product
candidates into, and successfully complete, clinical trials, 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 oncology or immunology portfolio and our CAR-T portfolio,
including any potential changes in such strategy, statements regarding our pipeline and
complementary technology platforms facilitating future growth, statements regarding
our commercialization efforts for our product candidates and any of our future approved
products,
if any, statements regarding the potential attributes and benefits of our
product candidates, including indications, dosing and treatment modalities, and their
potential competitive position with respect to other treatment alternatives, statements
regarding the global R&D collaboration with Gilead, and the amendment of our
arrangement with Gilead for commercialization and development of
filgotinib,
statements relating to the development of our commercial organization, commercial
sales, and rollout of our products or product candidates (if approved) globally,
statements relating to the development of our distributed manufacturing capabilities on
a global basis, statements regarding our supply chain, including our reliance on third
parties, and statements regarding our 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
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Galapagos NV Annual Report 2023
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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 2024 revenues, cash burn, operational expenses, or other
financial metrics 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, estimated patient populations,
product development activities, and regulatory approval requirements (including, but
not limited to, the risk that data and timing from our ongoing and planned clinical
research programs 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
potential benefits and risks related to our current collaborations, including our plans
and ability to enter into collaborations for additional programs or product candidates,
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 our preclinical and clinical 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), 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 encounter challenges retaining or attracting talent, and risks
related to disruption in our operations, supply chain, or ongoing studies due to conflicts
or macroeconomic issues.
A further list and description of these risks, uncertainties and other risks can be found in
our filings and reports with the Securities and Exchange Commission (“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
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the likelihood that actual results will differ from those set forth in any such statements,
unless specifically required by law or regulation.
Our Company
Our Vision and Mission
Our Vision
Transforming 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.
Our Forward, FasterStrategy
Our goal is to bring transformational medicines to patients across the globe for more
years of life and quality of life. Our focus is on conditions with high unmet medical need.
To achieve this, we are working to synergize compelling science, technology, and
approaches to develop a deep pipeline of potentially best-in-class small molecules,
CAR-T therapies and biologics in oncology and immunology.
We continue to take steps to transform into an innovative pure-play biotech company
by sharpening our focus on our key priority areas. Following the transfer of our entire
Jyseleca® (filgotinib) business, we are moving forward with greater focus and flexibility
to invest in our key technology platforms and strategic therapeutic areas.
We are committed to challenging the status quo and delivering results for patients,
employees, and shareholders.
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Realizing turnaround to drive value
Patient-centric, therapeutic area focus
Best-in-class immunology, oncology drugs
Pure play biotech
End-to-end R&D capabilities with a focus on breakthrough
medicines and high unmet needs
Internal and external innovation
Redesigned early discovery – different modalities
Streamlined, lean organization
~700 employees in BE, NL, CH, FR and the US
Significant cash burn reduction
2024 guidance of €280M-320M
We are committed to bringing transformational medicines to patients
across the globe
PIONEERING
FOR
PATIENTS
DIVERSIFYING AND
ACCELERATING
OUR PIPELINE
PARTNERING
FOR GREATER
IMPACT
MAKING IT
HAPPEN TOGETHER
AS A TEAM
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We have a clear path to value creation:
Pioneering for patients through our targeted R&D approach. At Galapagos, we are
focusing on discovering and developing best-in-class medicines in oncology and
immunology.
We are advancing our current clinical programs.
We are developing our unique decentralized CAR-T manufactured programs in
hemato-oncology.
We are continuing to pursue strategic investments and partnerships to support
and expand our pipeline. We are focused on validated targets and next-
generation cell therapies and biologics in oncology and immunology.
Diversifying our pipeline and making clear portfolio decisions to achieve our
vision. We believe we have a greater chance of success by working with multiple drug
modalities and combinations across our core therapeutic areas. By 2028, we aim to
have:
A first medicine available to patients.
A robust late-stage pipeline with several programs in pivotal trials.
A solid early-stage pipeline of small molecules, next-generation cell therapies and
biologics in our core therapeutic areas.
Accelerating and building our pipeline through strategic partnerships and M&A.
To achieve our ambitious goals, we evaluate and access external innovation. We
are scouting for the best science, products, and people to complement our internal
assets and capabilities, with the aim of building a balanced portfolio of best-in-
class medicines across modalities and development stages in our core therapeutic
areas. We are open to finding the best possible deal structure or collaboration model
that benefits Galapagos and our stakeholders, with a key focus on expanding and
accelerating our pipeline and bringing differentiated medicines to patients.
Fostering a strong culture of innovation. Our success is made possible by our
incredible teams. Our employees’ relentless drive for innovation, teamwork, and a
quality mindset focused on efficiency is what drives our progress. We are committed
to creating a purpose-driven, inclusive workplace where our people feel safe and
empowered, have opportunities to learn and grow, are recognized for their
contributions, and perform at their best as individuals and as a team.
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Life-changing science and innovation
We combine deep disease expertise and multiple drug modalities to accelerate time-to-
patients through our internal efforts and focused business development.
Cell Therapy
We have groundbreaking
research capabilities and a
decentralized manufacturing
platform for CAR-T
Small Molecules
We have a long
history and deep
R&D experience in
small molecules
Biologics
We are building
research capabilities
to discover novel
biological medicines
CAR-T cell therapy
In 2022, we entered the field of CAR-T and antibody-therapy research and development
through the acquisitions of CellPoint (in the Netherlands) and Abound Bio (in the U.S).
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 manufacturing model and cutting-edge fully human
antibody-based capabilities to design next-generation CAR-Ts.
CAR-T cell therapy near the point-of-care
Galapagos is committed to manufacturing personalized cell therapies at or near the
point-of-care (PoC). Our ambition is to reduce the manufacturing turnaround time
significantly from months or weeks to days, ensuring that patients can receive their
therapy in a timely manner.
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Our aspiration in cell therapy
Bring CAR-T to more patients
to save lives
Deliver improved
efficacy and safety
outcomes by infusing fit
cells within a median
vein-to-vein time of
7 days
Implement decentralized
CAR-T manufacturing
near the point-of-care
delivering greater
physician control and
exceptional patient
experience
Build a portfolio of
best-in-class CAR-Ts in
oncology and
immunology
Patient outcomes
Delivery model
Portfolio
Although current CAR-T cancer therapies have made continued progress, long lead
times, costly central manufacturing and complex logistics continue to be limiting factors
for large-scale capacity and broad patient access globally.
Limitations of current CAR-Ts
Medical need
Clinically
eligible
Receive
CAR-T
Patients with high unmet medical needs
can benefit from PoC CAR-T therapies:
Fast-progressing cancers
Poor prognosis/short(er) life expectancy
~ 70%* of eligible patients do NOT receive
CAR-T due to:
Limited capacity
Complex logistics
Restricted access
* Evidence-Based Oncology, October 2023, Volume 29, Issue 8
To address these challenges, we are implementing a differentiated, decentralized, point-
of-care CAR-T manufacturing platform that has the potential to deliver fresh, fit cells
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with a seven day vein-to-vein time, enabling greater physician control and a significantly
improved patient experience.
This innovative platform consists of an end-to-end xCellit® workflow management and
functionally closed, automated cell
monitoring software system, a decentralized,
therapy manufacturing platform (using Lonza’s Cocoon®) and a proprietary quality
control testing and release strategy.
Increase access with manufacturing near the point-of-care
Centralized
production
Freeze
Shipment
VS
Freeze
GMP Facility
Shipment
FRESH
7-DAY
VEIN-TO-VEIN
Decentralized
production
*vein-to-vein time: time between leukapheresis and infusion delivery at the hospital
CAR-T therapy in 7 days vein-to-vein: video
Decentralized,
point-of-care manufacturing
Automated platform
Real-time monitoring
Fresh CAR-T cells
produced at the clinic*
Limited logistics,
no cryopreservation
needed
Treatment is administered
to patients with minimal
wait time
xCellit® software + Cocoon® +
proprietary QC testing and release
strategy
Successfully tested
at EU clinical centers
Multi-center clinical
studies ongoing
*GMP production at a compliant manufacturing facility located at the clinic premises or in close proximity to the
clinic. The Cocoon® Platform is a registered trademark of Lonza Group AG.
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Next-generation CAR-Ts and biologics
Galapagos is developing very large, diverse human antibody libraries in standard
fragments of antigen-binding fragment (Fab), single-chain variable fragments (scFv), and
unique variable (VH) domain formats. These libraries enable our team to discover novel
high affinity binders in multiple formats rapidly (days to weeks), to optimize them for
development, and to convert them for multiple applications, including multi-specific
CAR-Ts, and fusion proteins.
Our proprietary methodologies have the potential to increase binder diversity, affinity
and specificity, and increase the probability of identifying a lead therapeutic antibody
candidate.
These unique capabilities enable us to develop next-generation CAR-T therapies that
have the potential to transform patient outcomes through potentially more effective and
longer-lasting treatment options, even in the event of relapse after prior CAR-T therapy.
Together with the decentralized CAR-T manufacturing model, at or near the point-of-
care, we aim to expand patient access and ultimately transform patient outcomes.
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
Small molecule research and precision medicine
In small molecule drug discovery, an assay designed to assess target activity is exposed
to large collections of small chemical molecules, allowing the identification of chemical
structures that interact with the target to block or activate its activity, resulting in the
target's modulation in the cells and prevention of disease-causing effects.
Since our founding, we have built extensive expertise in small molecule research and
development, and we are applying our small molecule approach to the discovery and
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development of potentially best-in-class precision medicines in our core therapeutic
areas of oncology and immunology.
Our in-house capabilities include chemical
library development, high throughput
screening, pharmacology, and preclinical development with the goal of accelerating the
time from target identification to first-in-human clinical development. In addition, we
have access to the innovative research and drug discovery capabilities and expertise of
NovAliX (France) through a five-year collaboration. We are actively building a deep, early-
stage small molecule pipeline addressing multiple targets across a range of indications
in our two therapeutic areas.
Our aspiration in small molecules
Bring next generation precision
medicines to patients in need
Deliver convenient,
efficient and safer
medicines to patients
Excellence in drug
discovery, agnostic to
modalities, focusing on
high unmet medical
needs in the field of
oncology and
immunology
Build a portfolio of
best-in-class,
best-in-disease drugs,
using next generation
precision medicines as
single agents or in
appropriate combination
regimens
Patient outcomes
Discovery approach
Portfolio
Competitive environment
We operate in a highly innovative industry characterized by rapid advances in the
understanding of disease biology, rapidly changing technologies, strong intellectual
property barriers to entry, and many companies involved in the discovery, development
and commercialization of novel medicines.
We compete with a broad range of biopharmaceutical companies that focus their
research and development activities on oncology and immunology, including drug
modalities that compete with Galapagos’ focus areas of small molecules, CAR-T cell
therapies and biologics.
For more information on industry trends and risks, we refer to the Risk Factors section
of this report.
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Key achievements in 2023
Corporate and Operational Performance 2023
Oncology portfolio
GLPG5201 (CD19 CAR-T) in relapsed/refractory chronic lymphocytic leukemia (rrCLL) and Richter
transformation (RT) (cut-off date: 6 September 2023)
Patient recruitment of the Phase 1 dose-finding part of EUPLAGIA-1 was completed:
15 patients were enrolled (6 at dose level 1 (DL1); and 9 at dose level 2 (DL2)), all of
whom were diagnosed with rrCLL and 9 with additional RT.
Presented encouraging preliminary Phase 1 data at the ASH Annual Meeting, which
demonstrated clinically meaningful
results in severely compromised patient
populations and highlighted the potential of Galapagos’ point-of-care CAR-T
manufacturing platform to deliver a fresh product with a median vein-to-vein time of
only seven days.
GLPG5101 (CD19 CAR-T) in relapsed/refractory non-Hodgkin lymphoma (rrNHL) (cut-off date:
1 September 2023)
To further build a robust data package, patient recruitment of the Phase 1 dose-
finding part of ATALANTA-1 is ongoing: 14 rrNHL patients with diffuse large B cell
lymphoma, mantle cell lymphoman, and indolent lymphoma were enrolled (7 at DL1
and 7 at DL2). In parallel, enrollment of the Phase 2 expansion study is ongoing, and
the first 9 patients were dosed.
Presented encouraging preliminary Phase 1 and Phase 2 data at the ASH Annual
Meeting, which demonstrated clinically meaningful results in severely compromised
patient populations and highlighted the potential of Galapagos’ point-of-care CAR-T
manufacturing platform to deliver a fresh product with a median vein-to-vein time of
only seven days.
GLPG5301 (BCMA CAR-T) in relapsed/refractory multiple myeloma (rrMM)
First patients were dosed in the PAPILIO-1 Phase 1/2 study to evaluate the safety,
efficacy and feasibility of point-of-care manufactured GLPG5301 in patients with
rrMM after ≥2 prior lines therapy.
Continued to evolve our oncology research activities in biologics, cell therapies and small
molecules
To deliver best-in-class medicines for patients with high unmet medical need.
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Immunology portfolio
Jyseleca® (filgotinib) (JAK1): successfully transferred to Alfasigma S.p.A.
Achieved reimbursement for both RA and UC across Western Europe. Sobi, the
distribution and commercialization partner for filgotinib in Eastern and Central
Europe, Portugal, Greece, and the Baltic countries, launched Jyseleca® in Poland and
Slovenia in both rhematoid arthritis (RA) and ulcerative colitis (UC), and in Croatia
and Greece for RA.
The European Commission endorsed the recommendation of the Pharmaceutical
Risk Assessment Committee (PRAC) to add safety measures for the JAK inhibitors
class of medicines.
Based on topline results from the Phase 3 DIVERSITY study in Crohn’s disease, a
Marketing Authorization Application (MAA) was not submitted in Europe in this
indication and the MAA for filgotinib in UC in Switzerland did not proceed.
First patients dosed in the pivotal Phase 3 OLINGUITO study in axial spondyloarthritis
(AxSpA).
Pipeline programs
First patients were dosed in the Phase 2 GALARISSO study of novel, oral, selective
tyrosine kinase 2 (TYK2) inhibitor, GLPG3667, in patients with dermatomyositis (DM)
and the Phase 2 GALACELA study in systemic lupus erythematosus (SLE).
We initiated multiple small molecules programs to expand our research pipeline in
immunology research pipeline.
Corporate update
Thad Huston was appointed as Chief Financial Officer (CFO) and Chief Operating
Officer (COO), succeeding Bart Filius, as of 1 July 2023.
The Board of Directors appointed Dr. Susanne Schaffert and Mr. Simon Sturge as
Non-Executive Independent Directors by way of cooptation, replacing respectively
Dr. Rajesh Parekh and Dr. Mary Kerr, who stepped down.
The Board of Directors created 1,538,400 subscriptions rights under new subscription
right plans, after acceptance by the beneficiaries.
We successfully completed the integrated drug discovery collaboration transaction
with NovAliX.
We signed a letter of intent with Alfasigma to transfer the entire Jyseleca® business
to Alfasigma, including the European and UK Marketing Authorizations, as well as the
commercial, medical and development activities for Jyseleca® and approximately
400 Galapagos positions in 14 European countries.
Galapagos and Gilead amended the Filgotinib Agreement to terminate the existing
50/50 global development cost sharing arrangement with Galapagos bearing the
costs going forward, and to terminate Galapagos’ obligation to pay tiered royalties to
Gilead on net sales of Jyseleca® in Europe, in addition to other amendments.
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We signed an agreement with Boston-based Landmark Bio and started the
technology transfer for the decentralized production of Galapagos’ CAR-T cell
therapy candidates.
Post-period events
For strategic reasons, we decided not to continue development of our CD19 CAR-T
candidate in refractory systemic lupus erythematosus (rSLE).
We participated in the Series C financing round of Frontier Medicines, a pioneer in
precision oncology with a unique technology platform and a pipeline of potential
best-in-class assets that fit with Galapagos’ precision oncology R&D approach. The
investment aligns with our innovation acceleration strategy to bring transformational
medicines to patients around the world.
We presented a poster at the annual EBMT-EHA congress highlighting new
preliminary translational data from EUPLAGIA-1, which demonstrate that our point-
of-care manufacturing platform has the potential to enable a single infusion of fresh
early-phenotype CD19 CAR-T cells with robust expansion and persistence in patients
with rrCLL and in patients with RT.
We signed a share and asset purchase agreement with Alfasigma to transfer the
entire Jyseleca® business to Alfasigma. As part of the transaction, the amended
Filgotinib Agreement between Galapagos and Gilead has been assigned by
Galapagos to Alfasigma. The transaction was successfully completed on 31 January
2024, which freed up resources to reinvested in R&D growth areas.
Michele Manto’s mandate as Chief Commercial Officer and member of the Executive
Committee of Galapagos ended in December 2023; he joined Alfasigma to lead the
Jyseleca® business.
We further streamlined our remaining operations, reducing approximately 100
positions across the Galapagos organization to align with the Galapagos’ renewed
focus on innovation.
We signed a strategic collaboration and license agreement with BridGene
Biosciences to strengthen Galapagos’ growing early-stage oncology precision
medicine pipeline.
We entered into a strategic collaboration agreement with Thermo Fisher Scientific for
CAR-T manufacturing and kitting services for Galapagos’ point-of-care CAR-T product
candidate in the San Francisco area.
The Board of Directors appointed Mr. Andrew Dickinson as Non-Executive Non-
Independent Director by way of cooptation. Mr. Andrew Dickinson is Gilead's Chief
Financial Officer and replaces Mr. Daniel O'Day, Gilead's Chief Executive Officer, who
was a member of the Galapagos Board of Directors from 22 October 2019 to 26 March
2024.
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Financial Performance for the year ending
31 December 2023
Consolidated Key Figures
(thousands of €, if not stated otherwise)
Income statement
Collaboration revenues
R&D expenditure
S&M, G&A expenses
Other operating income
Operating loss
Net financial results
Taxes
Net loss from continuing operations
Net profit/loss (-) from discontinued operations, net of tax
Net profit/loss (-)
Income statement from discontinued operations
Product net sales
Collaboration revenues
Cost of sales
R&D expenditure
S&M, G&A expenses
Other operating income
Operating profit/loss (-)
Net financial results
Taxes
Net profit/loss (-) from discontinued operations, net of tax
Balance sheet
Cash and cash equivalents
Current financial investments
R&D incentives receivables
Assets
Shareholders' equity
Deferred income
Other liabilities
Year ended
31 December 2023
Year ended
31 December 2022(*)
239,724
(241,294)
(133,965)
47,272
(88,263)
93,888
(9,613)
(3,988)
215,685
211,697
112,339
431,465
(18,022)
(190,177)
(131,346)
13,003
217,262
499
(2,076)
215,685
166,803
3,517,698
178,688
4,357,396
2,795,566
1,327,463
234,367
241,249
(269,797)
(138,635)
36,127
(131,056)
60,207
(572)
(71,421)
(146,570)
(217,991)
87,599
176,432
(12,079)
(245,286)
(153,851)
10,721
(136,464)
(7,834)
(2,272)
(146,570)
508,117
3,585,945
146,067
4,734,351
2,526,026
1,989,230
219,094
18
Galapagos NV Annual Report 2023
OUR BUSINESS
(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
Cash flow used in financing activities
Decrease in cash and cash equivalents
Effect of currency exchange rate fluctuation on cash and cash
equivalents
Cash and cash equivalents on 31 December
Year ended
31 December 2023
Year ended
31 December 2022(*)
(414,824)
(405,970)
71,186
(5,001)
(513,774)
(500,544)
(1,245,514)
(1,487)
(339,785)
(1,747,545)
(1,522)
166,810
22,293
508,117
Cash and cash equivalents from continuing operations
166,803
508,117
Cash and cash equivalents included in assets classified as held for
sale
7
-
Current financial investments on 31 December
3,517,698
3,585,945
Total current financial investments and cash and cash equivalents
on 31 December
3,684,514
4,094,062
Financial ratios
Number of shares issued on 31 December
65,897,071
65,835,511
Basic and diluted earnings/loss (-) per share (in €)
Share price on 31 December (in €)
Total group employees on 31 December (number)(**)
3.21
36.99
1,123
(3.32)
41.35
1,338
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
(**) Including in 2023 476 employees (2022 : 614 employees) related to our discontinued Jyseleca® business
As a consequence of the recent sale of our Jyseleca® business to Alfasigma, the revenues
and costs related to Jyseleca® for the year 2023 are presented separately from the results
of our continuing operations on the line “Net profit/loss (–)
from discontinued
operations” in our consolidated income statement. The comparative year 2022 has been
restated accordingly for the presentation of the results related to the Jyseleca® business.
Continuing Operations
Collaboration revenues from our continuing operations amounted to €239.7 million in
2023, compared to €241.2 million last year.
The revenue recognition related to the exclusive access rights granted to Gilead for our
drug discovery platform amounted to €230.2 million in 2023 (compared to €230.4 million
in 2022). We also recognized royalty income from Gilead for Jyseleca® for €9.5 million in
2023 (compared to €10.7 million in 2022).
19
Galapagos NV Annual Report 2023
OUR BUSINESS
Our deferred income balance at 31 December 2023 includes €1.3 billion allocated to
our drug discovery platform that is recognized linearly over the remaining period of our
10-year collaboration.
Our R&D expenditure in 2023 amounted to €241.3 million, compared to €269.8 million in
2022. Depreciation and impairment costs in 2023 amounted to €22.3 million (compared
to €51.5 million in 2022). This decrease was primarily due to an impairment of
€26.7 million of previously capitalized upfront fees related to our collaboration with
intangible assets related to other
Molecure and impairments of €8.9 million of
discontinued projects, both recorded in 2022. Personnel costs decreased from
€115.5 million in 2022 to €95.8 million in 2023 primarily related to lower accelerated non-
cash cost recognition for subscription right plans related to good leavers. This was partly
offset by an increase in costs from €61.2 million in 2022 to €83.0 million in 2023 following
the evolution of our CAR-T programs.
Our S&M expenses amounted to €5.7 million in 2023, compared to €3.5 million in 2022.
Our G&A expenses amounted to €128.3 million in 2023, compared to €135.2 million in
2022. The cost decrease was explained by a decrease in personnel costs to €66.1 million
in 2023 compared €76.5 million to 2022, due to lower accelerated non-cash cost
recognition for subscription right plans related to good leavers. Depreciation and
impairment expenses increased from €8.5 million in 2022 to €16.0 million in 2023 due to
an impairment of €7.6 million on a construction project in Mechelen, Belgium.
Other operating income (€47.3 million in 2023 compared to €36.1 million in 2022)
increased due to higher grant income (grant from the National Institute for Health and
Disability Insurance in 2023 of €6.1 million), higher other operating income (rent income)
and higher R&D incentives income.
We reported an operating loss amounting to €88.3 million in 2023, compared to an
operating loss of €131.1 million in 2022.
Net financial income in 2023 amounted to €93.9 million, compared to net financial
income of €60.2 million in 2022. Net financial income in 2023 was primarily attributable
to €38.3 million of net fair value gains of our current financial investments, partly offset by
€20.4 million of unrealized currency exchange losses on our cash and cash equivalents
and current financial investments at amortized cost in U.S. dollars. Net interest income
amounted to €77.5 million in 2023 as compared to €11.2 million of net interest income in
2022.
We had €9.6 million of tax expenses in 2023 (as compared to €0.6 million in 2022).
This increase was primarily due to the re-assessment of net deferred tax liabilities and
corporate income tax payables as a result of a one-off intercompany transaction.
We reported a net loss from continuing operations in 2023 of €4.0 million, compared to a
net loss from continuing operations of €71.4 million in 2022.
20
Galapagos NV Annual Report 2023
OUR BUSINESS
Discontinued operations
Net profit of discontinued operations attributable to the Jyseleca® business amounted
to €215.7 million in 2023, compared to €146.6 million net loss of discontinued operations
in 2022.
Jyseleca® product net sales in Europe amounted to €112.3 million in 2023, compared to
€87.6 million in 2022.
Cost of sales related to Jyseleca® net sales in Europe amounted to €18.0 million in 2023,
compared to €12.1 million for the year 2022.
Collaboration revenues in discontinued operations related to revenue recognition of
the collaboration agreement with Gilead for the filgotinib development amounted to
€429.4 million in 2023 compared to €174.4 million in 2022. This increase was explained
by a substantial decrease in our assessment of the remaining costs to complete the
filgotinib development following the recent sale of our Jyseleca® business to Alfasigma,
including the transfer of the remaining development performance obligation after
closing of the transaction. As a consequence, we saw a substantial increase of the
percentage of completion of our performance obligation, and a positive catch-up
released to revenues.
Total operating profit from discontinued operations amounted to €217.3 million in 2023,
compared to an operating loss of €136.5 million in 2022.
The decrease in R&D expenditures for the development of filgotinib was mainly due
to the discontinuation in early 2023 of the DIVERSITY clinical trials in CD. Personnel
expenses decreased by €15.0 million, from €74.6 million in 2022 to €59.6 million in 2023,
subcontracting costs decreased as well by €39.0 million, from €153.7 million in 2022 to
€114.7 million in 2023.
The decrease in S&M expenses from €144.1 million in 2022 to €113.4 million in 2023 is
reflected in a decrease in personnel costs by €10.8 million, from €70.2 million in 2022 to
€59.3 million in 2023 due to lower bonus costs and costs of our subscription right plans,
while external outsourcing costs decreased by €17.0 million, from €52.8 million in 2022
to €35.8 million in 2023 primarily explained by lower costs for marketing campaigns and
promotional expenses.
G&A expenses attributable to the Jyseleca® business increased from €9.8 million in 2022
to €18.0 million in 2023 primarily due to an increase in costs of our subscription right
plans; we experienced unusually low costs in 2022 due to a reversal of costs related to
voluntary leavers and saw an increase in salaries in 2023. The G&A expenses for the year
2023 also include one-off legal fees related to the transaction with Alfasigma for €3.5
million.
Other operating income attributable to the Jyseleca® business increased, mainly due to
higher R&D incentives income.
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Galapagos NV Annual Report 2023
OUR BUSINESS
The movement in other financial income/expenses is primarily explained by a lower
discounting effect of long-term deferred revenue for the development of filgotinib,
because we expect to recognize the remaining revenues in 2024. The financing
component related to our filgotinib performance obligation was re-assessed on
31 December 2023, considering the reduced duration and the expected end of the
performance obligation for the development of filgotinib.
We reported a net profit in 2023 of €211.7 million, compared to a net loss of
€218.0 million in 2022.
Cash, cash equivalents and current financial investments
Current financial investments and cash and cash equivalents totaled €3,684.5 million
on 31 December 2023 (including €20.0 million of accrued interest income) as compared
to €4,094.1 million on 31 December 2022 (excluding €9.9 million of net accrued interest
income).
Total net decrease in cash and cash equivalents and current financial investments
amounted to €409.6 million in 2023, compared to a net decrease of €609.1 million in
2022. This net decrease was composed of (i) €414.8 million of operational cash burn, (ii)
€20.4 million of negative exchange rate differences, (iii) €7.0 million cash-out related to
the acquisition of CellPoint B.V., (iv) €14.0 million acquisition of financial assets held at
fair value through profit or loss, offset by (v) €24.3 million positive changes in fair value
of current financial investments, (vi) €1.8 million of cash proceeds from capital and share
premium increase from exercise of subscription rights in 2023, and (vii) €12.9 million of
accrued interest income on term deposits and €7.6 million accrued interest income on
treasury bills.
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 and
financial assets held at fair value through profit or loss; 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, the
accrued interest on cash and cash equivalents, 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.
22
Galapagos NV Annual Report 2023
OUR BUSINESS
The following table presents a reconciliation of operational cash burn, to the closest IFRS
measures, for each of the periods indicated:
(thousands of €)
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
Acquisition of financial assets held at fair value through profit or loss
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
2023
2022
(339,785)
(1,747,545)
(1,770)
(94,233)
13,965
7,000
-
-
(6,695)
1,087,032
-
115,270
10,000
28,164
Total operational cash burn
(414,824)
(513,774)
23
Galapagos NV Annual Report 2023
OUR BUSINESS
The Galapagos shares in 2023
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 2023
80
60
40
20
0
01.01.2023
01.04.2023
01.07.2023
01.10.2023
29.12.2023
GLPG.AM (in EUR)
GLPG.US (in USD)
In 2023, the average daily trading volume on Euronext was 138,212 shares and
€5.1 million turnover. The daily trading volume on Nasdaq in 2023 was 193,201 American
Depository Shares (ADSs) and $7.6 million turnover.
24
Galapagos NV Annual Report 2023
OUR BUSINESS
Galapagos vs Next Biotech Index in 2023
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
02.01.2023
01.04.2023
01.07.2023
01.10.2023
29.12.2023
GLPG (Euronext)
Next Biotech Index
Galapagos vs Nasdaq Biotechnology Index in 2023
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0
02.01.2023
01.04.2023
01.07.2023
01.10.2023
29.12.2023
GLPG (Nasdaq)
Nasdaq Biotechnology Index
25
Galapagos NV Annual Report 2023
OUR BUSINESS
Investor relations activities
17 analysts cover the Galapagos stock.
Our IR team participated in 16 investor conferences in Europe and the U.S. in 2023.
Several broker-organized and self-organized roadshows and (virtual) meetings were held
throughout the U.S. and Europe, during which we held approximately 465 investor
meetings. We organized webcasts to present our 2022 Full Year, and our 2023 Q1, Half
Year, and Q3 results.
The main topics of discussion with investors in 2023 included the strategic review,
including the transfer of Jyseleca®, the refocusing of our pipeline and rightsizing of our
operations, management changes, cash burn and capital allocation, our BD strategy
and plans, the collaboration with partner Gilead, the clinical development plans and
progress with our selective TYK2 inhibitor, GLPG3667 in DM and SLE, the safety and
efficacy initial results with GLPG5101 in rrNHL and GLPG5201 in rrCLL and RT, the roll-out
our CAR-T point-of-care manufacturing platform and regulatory progress, our efforts in
immunology with CAR-T, and progress in our early-stage pipeline in both oncology and
immunology.
Our major shareholders at 31 December 2023 are provided in the chart below:
51.80%
Other shareholders
25.35%
Gilead
7.03%
Van Herk Investments
9.87%
EcoR1 Capital
0.02%
Insiders
5.92%
FMR LLC
26
Galapagos NV Annual Report 2023
OUR BUSINESS
Outlook 2024
Financial outlook
For the full year 2024, we anticipate a further reduction in our cash burn to between
€280 million and €320 million (compared to €414.8 million for the full year 2023), not
including future potential business development opportunities.
R&D Outlook
We aim to progress three CAR-T Phase 1/2 studies in hemato-oncology: GLPG5101 in
rrNHL; GLPG5201 in rrCLL, with or without RT; and GLPG5301 in rrMM.
We expect to file IND applications in the U.S. to begin clinical development of our
CAR-T programs in hemato-oncology.
We plan to scale up our CAR-T network and operations further in the U.S. and Europe,
and potentially in other key regions.
Business development
We will continue to evaluate multiple product candidates and business development
opportunities to leverage our internal capabilities further, and accelerate and expand
our pipeline of potential best-in-class investigational medicines in our therapeutic focus
areas of immunology and oncology.
Going concern statement
To date, we have incurred significant operating losses, which are reflected in the
consolidated balance sheet showing €228.3 million accumulated losses as at
31 December 2023. We realized a consolidated net profit of €211.7 million for the year
ended 31 December 2023. Our existing current financial investments and cash and cash
equivalents of €3,684.5 million at 31 December 2023 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.
27
Galapagos NV Annual Report 2023
OUR BUSINESS
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 established 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. Based on 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, 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 continuously manages the financial risks concerning the activities of the
group. These relate to the following financial markets risks: credit risk, liquidity risk,
28
Galapagos NV Annual Report 2023
OUR BUSINESS
currency and interest rate risk. Our interest rate risk is limited because we have nearly no
financial debt. In the event of decreasing interest rates we would 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 impact 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 2023 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.
29
Galapagos NV Annual Report 2023
Portfolio
Our programs in oncology and
immunology
Pioneering science to
transform patient outcomes
PORTFOLIO
Portfolio
We focus on delivering best-in-class medicines with transformational
impact for
patients by accelerating life-changing science and innovation in the fields of oncology
and immunology.
The following diagram 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
Preclinical
Phase 1
Phase 2
Phase 3
Approved
Y
G
O
L
O
C
N
O
5101
5201
5301
CD19 CAR-T
CD19 CAR-T
BCMA CAR-T
Multiple targets
Program
3667
Class
TYK2
Multiple targets
Y
G
O
L
O
N
U
M
M
I
NHL
CLL & RT
MM
Preclinical
Phase 1
Phase 2
Phase 3
Approved
SLE & DM
NHL, non-Hodgkin lymphoma; CLL, chronic lymphocytic leukemia; RT, Richter Transformation; MM, multiple
myeloma; SLE, systemic lupus erythematosus; DM, dermatomyositis
We operate in an intensely competitive sector, which is subject to rapid and significant
technological change and innovation. For a description of the competitive landscape, we
refer to the Risks section related to our competitive position.
31
Galapagos NV Annual Report 2023
PORTFOLIO
Oncology
Cancer leaves no one untouched, affecting many of us in one way or another. The
urgency for effective, broadly accessible treatment options and novel therapies is
paramount, as the outlook for patients is often grim, with survival measured in
months rather than years. Advances in cancer research stands as our sole beacon of
hope in addressing this disease and transforming patient outcomes.
We passionately strive to turn cancers into manageable chronic conditions or even
curable diseases.
Our oncology researchers are determined to rise to the challenge to overcome the
devastating impact of cancer by accelerating new ways to target cancer from different
angles, whether through small molecules, antibody-based biological therapies, or novel
chimeric antigen receptor (CAR-T) cell therapies, coupled with ingenious manufacturing
technologies, and other revolutionary approaches.
We believe in synergizing the most compelling science and technology from both within
and outside our organization to introduce a new multi-faceted treatment paradigm for
cancers with significant unmet medical needs.
Our current clinical development is focused on hematological cancers for patients in
need of additional and improved treatment options: non-Hodgkin’s lymphoma, chronic
lymphocytic leukemia with or without Richter transformation, and multiple myeloma.
32
Galapagos NV Annual Report 2023
PORTFOLIO
CAR-T Pipeline manufactured at or near the 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 a second generation anti-CD19/4-1BB CAR-T product candidate,
administered as a single fixed intravenous dose. The safety, efficacy and feasibility of
point-of-care manufactured GLPG5101 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 study was to evaluate safety and to
determine the recommended dose for the Phase 2 part of the study. Secondary
objectives include assessment of efficacy and feasibility of near the point-of-care
manufacturing of GLPG5101. The dose levels that were evaluated in Phase 1 are 50x106
(DL1), 110x106 (DL2) and 250x106 (DL3) CAR+ viable T cells. The primary objective of
the Phase 2 part of the study 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 the
feasibility of point-of-care manufacturing. Each enrolled patient will be followed for
24 months.
33
Galapagos NV Annual Report 2023
PORTFOLIO
ATALANTA-1 Phase 1/2 study design of GLPG5101 in rrNHL
'5101 basket trial in DLBCL, MCL, MZL, FL, BL & PCNSL
Ph1 - dose escalation (n≈15)
DL1 ‘5101 (50 x10^6 CAR T cells)
DL2 ‘5101 (110 x10^6 CAR T cells)
DL3 ‘5101 (250 x10^6 CAR T cells)
Ph2 - dose expansion
(n≈30 per indication)
‘5101 RP2D 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
n
o
i
t
a
l
u
p
o
p
t
n
e
i
t
a
P
Key eligibility criteria
r/r DLBCL, MCL, MZL, FL, BL & PCNSL
≥ 2 prior lines of therapy, or primary refractory DLBCL or BL
≥ 1 prior line of therapy for PCNSL
Not achieving CR to 2L therapy for BL and PCNSL
Incl. transplant ineligible
No prior CD19-targeted therapy allowed
BL, Burkitt lymphoma; DL, dose level; DLBCL, diffuse large B-cell lymphoma; FL, follicular lymphoma; MCL, mantle
cell lymphoma; MZL, marginal zone lymphoma; PCNSL, primary central nervous system lymphoma; rrNHL, relapsed/
refractory non-Hodgkin lymphoma; RP2D, recommended phase 2 dose. EudraCT 2021-003272-13. Patient
conditioning is lymphodepleting chemotherapy.
34
Galapagos NV Annual Report 2023
PORTFOLIO
Baseline characteristics ATALANTA-1
Heavily pretreated population of NHL patients
Age, median (range), years
Male, n (%)
Disease subtype, n (%)
DLBCL
FL
MCL
MZL
IPI/MIPI/FLIPI score; high risk, n (%)
No. of prior therapy lines, median (range)
ECOG performance status screening, n (%)
0
1
2
Prior ASCT, n (%)
Ann Arbor disease stage III-IV, n (%)
Extranodal disease, n (%)
Phase 1
(N=14)
Phase 2
(N=9)
65 (50-77)
69 (46-73)
11 (79)
4 (44)
7 (50)
3 (21.5)
3 (21.5)
1 (7)
6 (43)
4 (1-7)
6 (43)
8 (57)
6 (43)
13 (93)
5 (36)
0
6 (67)
2 (22)
1 (11)
6 (67)
4 (2-11)
4 (44.5)
3 (33.5)
2 (22)
3 (33)
6 (67)
2 (22)
Poster presented at the 2023 ASH Annual Meeting and Exposition; December 9-12, 2023; San Diego, CA.
ASCT, autologous stem cell transplant; DL, dose level; DLBCL, diffuse large B-cell lymphoma; ECOG, Eastern Cooperative Oncology Group; FL,
follicular lymphoma; (M, FL)IPI, (mantle cell lymphoma, follicular lymphoma) international prognostic index; MCL, mantle cell lymphoma;
MZL, marginal zone lymphoma; NHL, non-Hodgkin lymphoma
To further build a robust data package, patient recruitment of the Phase 1 dose-finding
part of ATALANTA-1 is ongoing. As of 1 September 2023 (cut-off date), 14 heavily pre-
treated rrNHL patients with diffuse large B cell lymphoma, mantle cell lymphoma and
indolent lymphoma were enrolled (7 at DL1 and 7 at DL2). In parallel, enrollment of the
Phase 2 expansion study is ongoing, and the first 9 patients have been dosed.
In December 2023, we presented promising new preliminary data from the ATALANTA-1
Phase 1 dose-finding part of the study and preliminary data of the Phase 2 expansion
part during a poster session at the 65th Annual American Society of Hematology (ASH)
Congress San Diego (cut-off date: 1 September 2023). The detailed results are presented
below.
35
Galapagos NV Annual Report 2023
PORTFOLIO
Encouraging safety profile: ATALANTA-1 preliminary results in heavily pretreated patient
population
CRS, n (%)
Grade 1-2
Grade 3
ICANS, n (%)
Grade 1
Grade 3
Grade 5 events, n (%)
CRS, cytokine release syndrome; ICANS, immune effector cell-associated neurotoxicity syndrome
Phase 1
(N=14)
7 (50)
6
1
Phase 2
(N=9)
3(33)
3
0
6 (43)
1 (11)
6
0
2 (14)
0
1
0
Encouraging efficacy data in rrNHL: ATALANTA-1 preliminary results in
heavily pretreated patient population
Phase 1
1/7
1/7
2/14
1/14
1/7
11/14
5/7
6/7
)
%
(
s
t
n
e
i
t
a
P
100
80
60
40
20
0
)
%
(
s
t
n
e
i
t
a
P
100
80
60
40
20
0
Phase 2
1/7
2/7
4/7
All patients
(n=14)
DL1
(n=7)
DL2
(n=7)
All efficacy-evaluable patients (n=7)
CR
PR
No response
Data presented at ASH 2023 (Kersten MJ, et al). ASH poster #2113, 9 Dec 2023 17:30–19:30 CET. Cut-off date:
1 September 2023
DL1: 50x1006 CAR-positive viable T cells, DL2: 110x1006 CAR-positive viable T cells. DL, dose level; CR, complete
response; CRR, complete response rate; ORR, objective response rate; PR, partial response; rrNHL, relapsed/
refractory non-Hodgkin lymphoma.
36
Galapagos NV Annual Report 2023
PORTFOLIO
In the Phase 1 part of the study (cut-off date: 1 September 2023):
GLPG5101 showed an encouraging safety profile. Most treatment emergent
adverse events (TEAEs) were Grade 1 or 2 and the majority of the few Grade ≥ 3
events were hematological. No cytokine release syndrome (CRS) Grade > 3 and
no immune effector cell-associated neurotoxicity syndrome (ICANS) Grade ≥ 2
were observed.
12 of 14 evaluable patients responded to treatment (ORR of 86%), with 11 of 14
patients achieving a Complete Response (CRR of 79%). 6 of 7 patients treated
with the higher dose level (DL2) responded to treatment (ORR of 86%) and
achieved a Complete Response (CRR of 86%). At the time of the analysis, 8 of
12 responding patients (67%) had an ongoing response, with a duration up to
15 months (median follow-up of 8.6 months); 2 of the 4 patients who progressed
after an initial response had a CD19 positive relapse and 1 had confirmed
CD19-negative disease.
In the Phase 2 part of the study (cut-off date: 1 September 2023):
GLPG5101 showed an encouraging safety profile with most TEAEs of Grade 1 or
2; the majority of Grade ≥ 3 events were hematological. No CRS Grade > 2 and
ICANS was seen in one patient (Grade 3).
6 of 7 evaluable patients responded to treatment (ORR of 86%) and a Complete
Response was observed in 4 of 7 patients (57%). At the time of the analysis, all 6
responding patients (100%) had an ongoing response with a median follow-up of
3.2 months.
At ASH, we also showcased encouraging preliminary translational data with regard to the
status of the CAR-T cells in the GLPG5101 final product (FP).
A thorough characterization of the collected patient material in the ATALANTA-1 trial (19
patients) revealed an increased percentage of ‘early phenotype’ T cells (i.e. TN/SCM and
TCM, CD4+ and CD8+) in the final product compared to the starting material (apheresed
blood). This was in line with the observed decrease in more differentiated,
‘late
phenotype’ T cells (i.e. TEM/EFF, CD4+ and CD8+).
This early phenotype reflects the differentiation status of the cells, which is associated
with enhanced functionality and persistence of CAR-T cells after infusion in the patient.
37
Galapagos NV Annual Report 2023
PORTFOLIO
GLPG5101 product characteristics
GLPG5101 enriches frequency of early phenotype (i.e. T N/SCM and T CM) CD4 + and
CD8 + CAR-T cells in final drug product (FP) compared to T cells in starting material
(SM), in tandem with decrease in T EM/EFF CAR-T cells
T N
N: Naïve
T SCM
SCM: Stem
cell memory
Differentiation
T CM
CM: Central
memory
T EM
EM: Effector
memory
T EFF
EFF: Terminal
effector
Phenotype percentages of CD4 + or CD8+ (gated on CAR-T cells for FP) for paired patient samples (n=19)
T N/SCM
CD4+
T CM
T EM/EFF
med: 3.3
med: 7.6
med: 20.7
med: 33.6
med: 76.3
med: 55.8
SM
FP
SM
FP
SM
FP
T N/SCM
CD8+
T CM
T EM/EFF
med: 2.4
med: 9.4
med: 8
med: 30.3
med: 87.2
med: 56.9
)
s
l
l
e
c
+
4
D
C
f
o
%
(
t
e
s
b
u
s
l
l
e
c
T
100
75
50
25
0
)
s
l
l
e
c
+
8
D
C
f
o
%
(
t
e
s
b
u
s
l
l
e
c
T
100
75
50
25
0
SM
FP
SM
FP
SM
FP
TN/SCM (CD45RO−CD197+)
TCM (CD45RO+CD197+)
TEM/EFF (CD45RO+/− CD197−)
Median of the differences (n=19)
phase 1
phase 2
Poster presented at the 2023 ASH Annual Meeting and Exposition; December 9-12, 2023; San Diego, CA. Cut-off date
of 1 September 2023.
Exploratory flow cytometry analysis of T-cell subsets in the apheresis starting material (SM) and final product (FP),
showing box plots with first quartile (Q1), median (Q2) and third quartile (Q3), whiskers as well as all the individual
datapoints. Med, median.
38
Galapagos NV Annual Report 2023
PORTFOLIO
In addition, we evaluated the kinetics of expansion of the manufactured CAR-T cells in
the patient by measuring the levels of CAR vector copies in blood after infusion.
Robust CAR-T cell expansion was observed in the treated patients across all dose levels
with a median time to peak expansion of 14 days. In 3 out of 4 evaluable patients, we
were able to detect the GLPG5101 CAR-T cells up to 9 months post-infusion (cut-off date
of 1 September 2023).
These findings support the persistence of GLPG5101, which could be an early predictor
of durable responses.
Cellular expansion and persistence of GLPG5101
Robust CAR T-cell expansion observed across dose levels
GLPG5101 DL1
GLPG5101 DL2
Below LOQ
A
N
D
g
µ
/
s
e
i
p
o
c
r
o
t
c
e
V
10000000
1000000
100000
10000
1000
0
S 0
D28 W8
W14
M6
M9
M12
Time since CAR-T infusion
GLPG5101 detected in peripheral blood up to 9 months post-infusion
Median time to peak expansion of 14 days
Poster presented at the 2023 ASH Annual Meeting and Exposition; December 9-12, 2023; San Diego, CA. Cut-off date
of 1 September 2023.
Quantification of GLPG5101 in peripheral blood by qPCR. Limit of quantification (LOQ) 1,000 vector copies. Phase 2
target dose is DL2.
DL, dose level; qPCR, quantitative polymerase chain reaction; S, screening.
The ATALANTA-1 preliminary data suggest
that Galapagos’ CAR-T point-of-care
manufacturing platform can deliver a fit product in a median vein-to-vein time of only
seven days.
39
Galapagos NV Annual Report 2023
PORTFOLIO
GLPG5201: CD19 CAR-T in relapsed and refractory chronic
lymphocytic leukemia
Chronic lymphocytic leukemia (CLL) is one of the chronic lymphoproliferative
disorders (lymphoid neoplasms).
is characterized by a progressive
It
accumulation of functionally incompetent lymphocytes, which are usually
monoclonal in origin. CLL affects B-cells in the blood and bone marrow.1
Richter 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. CLL 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 estimated incidence of 4.7 new cases per 100,000 individuals,
CLL is the most prevalent lymphoid malignancy and is the most common
adult leukemia in the US and in Europe.2 The annual incidence of patients with
RT has been estimated at 1,900 new patients in the US and 2,000 in the EU5.3
GLPG5201 is a second generation anti-CD19/4-1BB CAR-T product candidate,
administered as a single fixed intravenous dose. The safety, efficacy and feasibility of
point-of-care manufactured GLPG5201 are currently being evaluated in the EUPLAGIA-1
Phase 1/2, open-label, multicenter study in patients with rrCLL and rrSLL (small
lymphocytic lymphoma), with or without RT.
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.
1
2
3
Wierda WG. Chronic lymphocytic leukemia/ Small
https://www.lymphoma.org/wp-content/uploads/2018/04/LRF_FACTSHEET_CLL_SLL.pdf
Siegel RL, Miller KD, Fuchs HE, Jemal A. Cancer Statistics, 2021. CA: A Cancer Journal
https://www.ncbi.nlm.nih.gov/books/NBK493173
IMARC report, 2023; 2-15% of incidence per Lightning Health literature review; Sigmund AM et al. 2022; Thompson PhA et al. 2022.IMARC
report, 2023; 2-15% of incidence per Lightning Health literature review; Sigmund AM et al. 2022; Thompson PhA et al. 2022.
lymphocytic lymphoma fact sheet.
In: Foundation LR, editor. 2018:
for Clinicians. 2021;71(1):7-33.
40
Galapagos NV Annual Report 2023
PORTFOLIO
EUPLAGIA-1 Phase 1/2 study design of GLPG5201 in rrCLL, with or
without RT
Ph1 - dose escalation (n≈15)
Ph2 - dose expansion (n≈30)
DL1 ‘5201 (35 x10^6 CAR T cells)
DL2 ‘5201 (100 x10^6 CAR T cells)
DL3 ‘5201 (300 x10^6 CAR T cells)
‘5201 RP2D 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
n
o
i
t
a
l
u
p
o
p
t
n
e
i
t
a
P
Key eligibility criteria
Patients with RT eligible regardless of prior therapy
CD19+ relapsed/refractory CLL or SLL after ≥ 2 prior lines of therapy including BTKi, BCL2i, PI3Ki
Age >= 18 years
ECOG PS 0 and 1
Incl. transplant ineligible
No prior CD19-targeted therapy allowed
DL, dose level; RP2D, recommended phase 2 dose; rrCLL, relapsed/refractory chronic lymphocytic leukemia; RT,
Richter Transformation; SLL, small lymphocytic lymphoma; BTKi, bruton tyrosine kinase inhibitor; BCL2i, B cell
lymphoma 2 inhibitor; PI3Ki, Phosphoinositide 3-kinase inhibitors; ECOG PS, Eastern Cooperative Oncology Group
(ECOG) performance status. Patient conditioning is lymphodepleting chemotherapy. EudraCT 2021-003815-25.
41
Galapagos NV Annual Report 2023
PORTFOLIO
Baseline characteristics EUPLAGIA-1: heavily pre-treated CLL & RT patient population
Age, median (range), years
Male, n (%)
Disease subtype, n (%)
CLL
RT
No. of prior therapy lines, median (range)
Prior BTKi, n (%)
Prior venetoclax, n (%)
Prior BTKi and venetoclax, n (%)
Prior allo-HSCT, n (%)
High-risk features(*), n (%)
17p deletion
TP53 mutated
Complex karyotype(**)
IGHV unmutated(***)
All patients
(N=15)
66 (50-74)
10 (67)
6 (40)
9 (60)
3 (2-10)
13 (87)
12 (80)
11 (73)
1 (7)
3/13 (23)
6/13 (46)
3/6 (50)
13/13 (100)
Data presented at ASH 2023 (Tovar N, et al.) ASH poster #2112, 9 Dec 2023 5:30-7:30 PM. Cut-off date: 26 April 2023.
BTKi, bruton tyrosine kinase inhibitors; CLL, chronic lymphocytic leukemia; HSCT, hematopoietic stem cell transplantation; RT, Richter
Transformation; IGHV, immunoglobulin heavy chain variable region.
(*) Information on 17p deletion and TP53 mutation were reported for 13 patients
(**) karotyping was reported for 6 patients. Complex karotype was defined as 3 or more aberrations
(***) IGHV mutation status reported for 13 patients
In February 2023, we presented initial encouraging safety and efficacy data (cut-off date:
9 January 2023) from the EUPLAGIA-1 Phase 1 study during a poster session at the EBMT-
EHA 5th European CAR-T-cell Meeting in Rotterdam.
As of 6 September 2023, patient recruitment of the Phase 1 dose-finding part of
EUPLAGIA-1 had been completed, and 15 patients (6 at dose level 1 (DL1); and 9 at
dose level 2 (DL2)) were enrolled, all of whom were diagnosed with rrCLL, and 9 with
additional RT. All 15 Phase 1 batches were manufactured at the point-of-care and infused
as a single fresh, fit product within a median vein-to-vein time of seven days, with 80% of
patients receiving the product in seven days. In December 2023, we presented promising
new preliminary data from the Phase 1 dose-finding part of the study during a poster
session at the 65th Annual ASH Congress in San Diego. Efficacy data as of day 28 were
available for 14 patients; 1 patient did not yet reach the day 28 follow-up visit at the time
of the analysis. The results (cut-off date: 6 September 2023) are presented below:
42
Galapagos NV Annual Report 2023
PORTFOLIO
Encouraging interim safety data: EUPLAGIA-1 preliminary Phase 1 data in heavily
pretreated patient population
CRS, n (%)
Grade 1/2
Grade ≥3
ICANS, n (%)
Any grade
All patients (N=15)
7 (47)
7
0
0
CRS, Cytokine release syndrome; ICANS: immune effector cell-associated neurotoxicity syndrome
Promising clinical activity observed in rrCLL and RT: EUPLAGIA-1
preliminary Phase 1 data in heavily pretreated patient population
)
%
(
s
t
n
e
i
t
a
P
100
80
60
40
20
0
Best objective response*
1/14
5/14
1/6
2/6
3/8
8/14
3/6
5/8
All patients
(n=14)
DL1
(n=6)
DL2
(n=8)
CR
PR
No response
Data presented at ASH 2023 (Tovar N, et al.) ASH poster #2112, 9 Dec 2023 17:30–19:30 CET. Cut-off date: 6 September
2023.
*Combined response, iwCLL for CLL patients without RT and Lugano classification for patients with RT. DL1: 35x106
CAR-positive viable T cells, DL2: 100x106 CAR-positive viable T cells. CR, complete response; CRR, CR rate; DL, dose
level; ORR, objective response rate; RT, Richter Transformation; PR, partial response; rrCLL, relapsed/refractory
chronic lymphocytic leukemia. 1 CLL patient not yet efficacy-evaluable (D28 not reached).
43
Galapagos NV Annual Report 2023
PORTFOLIO
Promising clinical activity observed in RT subset: EUPLAGIA-1
preliminary Phase 1 data in RT patients
)
%
(
s
t
n
e
i
t
a
P
100
80
60
40
20
0
Best objective response*
1/9
2/9
1/3
2/6
6/9
2/3
4/6
All patients
(n=9)
DL1
(n=3)
DL2
(n=6)
CR
PR
No response
Data presented at ASH 2023 (Tovar N, et al.) ASH poster #2112, 9 Dec 2023 17:30–19:30 CET. Cut-off date: 6 September
2023.
*Combined response, iwCLL for patients without RT and Lugano classification for patients with RT. DL1: 35x106 CAR-
positive viable T cells, DL2: 100x106 CAR-positive viable T cells. CR, complete response; CRR, CR rate; DL, dose level;
ORR, objective response rate; RT, Richter Transformation; PR, partial response; rrCLL, relapsed/refractory chronic
lymphocytic leukemia.
GLPG5201 showed an encouraging safety profile with most TEAEs of Grade 1 or 2,
mostly hematological. CRS Grade 1 or 2 was observed in 47% of the patients, and no
CRS Grade ≥ 3 or any ICANS were observed. No deaths were reported.
Overall, 13 of 14 efficacy evaluable patients responded to treatment (Objective
Response Rate (ORR) of 93%) and 8 of 14 patients achieved a Complete Response
Rate (CRR of 57%). 8 of 9 patients with RT responded to treatment (ORR of 89%) and
6 of 9 RT patients achieved a Complete Response (CRR of 67%). At time of analysis,
10 of 13 of responding patients (77%) were in ongoing response with a median
follow-up of 6 months; 2 of 3 patients who progressed after an initial response had
confirmed CD19-negative disease.
On the higher dose level (DL2), 8 of 8 patients responded to treatment (ORR of 100%),
5 of 8 patients achieved a Complete Response (CRR of 63%), and 6 of 6 patients with
RT responded to treatment (ORR of 100%).
DL2 was selected as the recommended dose for the Phase 2 part of the study.
44
Galapagos NV Annual Report 2023
PORTFOLIO
At the annual EBMT-EHA congress in February 2024, we showcased encouraging
preliminary translational data regarding the status of the CAR-T cells in the GLPG5201
final product (FP).
A thorough characterization of the collected patient material in the EUPLAGIA-1 trial (10
patients) revealed an increased percentage of ‘early phenotype’ T cells (i.e. TN/SCM and
TCM, CD4+ and CD8+) in the final product compared to the starting material (apheresed
blood). This was in line with the observed decrease in more differentiated,
‘late
phenotype’ T cells (i.e. TEM/EFF, CD4+ and CD8+).
This early phenotype reflects the differentiation status of the cells, which is associated
with enhanced functionality and persistence of CAR-T cells after infusion in the patient.
45
Galapagos NV Annual Report 2023
PORTFOLIO
GLPG5201 product characteristics
GLPG5201 enriches frequency of early phenotype (i.e. TN/SCM and TCM) CD4+ and
CD8+ CAR-T cells in final drug product compared to T cells in starting material, in
tandem with a decrease in TEM/EFF CAR-T cells
T N
N: Naïve
T SCM
SCM: Stem
cell memory
Differentiation
T CM
CM: Central
memory
T EM
EM: Effector
memory
T EFF
EFF: Terminal
effector
Phenotype percentages of CD4 + or CD8+ (gated on CAR-T cells for FP) for paired patient samples (n=10)
T N/SCM
CD4+
T CM
T EM/EFF
med: 6.3
med: 15.8
med: 21.9
med: 29.1
med: 68.2
med: 41.6
SM
FP
SM
FP
SM
FP
T N/SCM
CD8+
T CM
T EM/EFF
med: 5.7
med: 23.1
med: 4.1
med: 29
med: 90.2
med: 36.3
)
s
l
l
e
c
+
4
D
C
f
o
%
(
t
e
s
b
u
s
l
l
e
c
T
100
75
50
25
0
)
s
l
l
e
c
+
8
D
C
f
o
%
(
t
e
s
b
u
s
l
l
e
c
T
100
75
50
25
0
SM
FP
SM
FP
SM
FP
TN/SCM (CD45RO−CD197+)
TCM (CD45RO+CD197+)
TEM/EFF (CD45RO+/− CD197−)
Median of the differences (n=10)
CLL
RT
Poster presented at the 2023 ASH Annual Meeting and Exposition; December 9-12, 2023; San Diego, CA. Cut-off date:
6 September 2023.
Exploratory flow cytometry analysis of T-cell subsets in the apheresis starting material (SM) and final product (FP),
showing box plots with first quartile (Q1), median (Q2) and third quartile (Q3), whiskers as well as all the individual
datapoints. Med, median.
46
Galapagos NV Annual Report 2023
PORTFOLIO
Similarly to the ATALANTA-1 study, we evaluated the kinetics of expansion of the
manufactured CAR-T cells in the patient by measuring the levels of CAR vector copies in
blood after infusion.
CAR-T cell expansion and persistence data was available for 13 of 15 patients. Robust
expansion was observed in all patients for the dose levels tested with a median time to
peak expansion of 14 days.
In 3 out of 4 evaluable patients, we were able to detect the GLPG5201 CAR-T cells up to
9 months post-infusion (cut-off date of 6 September 2023). These findings support the
persistence of GLPG5201, which could be an early predictor of durable responses.
Cellular expansion and persistence of GLPG5201
Robust CAR T-cell expansion observed in all patients
GLPG5201 DL1
GLPG5201 DL2
Below LOQ
A
N
D
g
µ
/
s
e
i
p
o
c
r
o
t
c
e
V
1000000
100000
10000
1000
100
0
S 0
D28 W8 W14
M6
M9
M12
M15
Time since CAR-T infusion
GLPG5201 detected in peripheral blood up to 15 months post-infusion
Median time to peak expansion of 14 days
Poster presented at the 2023 ASH Annual Meeting and Exposition; December 9-12, 2023; San Diego, CA. Cut-off date:
6 September 2023.
DL, dose level; LOQ, limit of quantification.
The EUPLAGIA-1 preliminary safety, efficacy, and translational data presented above
suggest that Galapagos’ CAR-T point-of-care manufacturing platform can deliver a fit
product in a median vein-to-vein time of only seven days.
47
Galapagos NV Annual Report 2023
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. Diagnosis 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.
Despite improvements in treatment, in general, patients with MM ultimately
relapse or become refractory to available regiments. Triple-refractory
(refractory to CD38 monoclonal antibodies [mAbs], proteasome inhibitor [PI]
and immunomodulatory imide drug [IMiD] or penta-refractory (refractory to
CD38 mAbs, 2 Pls and 2 IMiDs) patients have a poor prognosis and are in
urgent need of novel treatment options.
GLPG5301 is an autologous, second-generation/4-1BB B-cell maturation antigen
(BCMA)-directed CAR-T product candidate, administered as an intravenous infusion of
a fresh product in a single fixed dose, at the point-of-care. In December 2023, we
announced that the first patient with rrMM was dosed in the Phase 1/2 PAPILIO-1 study.
PAPILIO-1 is a Phase 1/2, open-label, multicenter study to evaluate the safety, efficacy
and feasibility of point-of-care manufactured GLPG5301, a BCMA CAR-T product
candidate, in patients with relapsed/refractory multiple myeloma (rrMM) after ≥2 prior
lines therapy. 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.
The primary objective of the Phase 2 part of the study is to evaluate the efficacy of
GLPG5301, as measured by the ORR. Secondary objectives for both Phase 1 and Phase 2
include further assessment of the safety of GLPG5301, additional efficacy endpoints,
including assessment of Minimal Residual Disease (MRD), as well as the feasibility of
point-of-care manufacture of GLPG5301 in rrMM patients. Each enrolled patient will be
followed for 24 months. During Phase 1, up to 3 dose levels will be evaluated and at least
12 patients will be enrolled to establish the recommended Phase 2 dose. Approximately
30 additional patients will be enrolled in the Phase 2 part of the study to evaluate the
safety and efficacy of GLPG5301.
48
Galapagos NV Annual Report 2023
PORTFOLIO
PAPILIO-1 Phase 1/2 study design of GLPG5301 in rrMM
Ph1 - dose escalation (n=12-24)
DL1 ‘5301 (35 x10^6 CAR T cells)
DL2 ‘5301 (100 x10^6 CAR T cells)
DL3 ‘5301 (300 x10^6 CAR T cells)
Ph2 - dose expansion (n≈30)
‘5301 RP2D dose
Screening
Leukapheresis
‘5301 CD19 CAR-T
Single infusion
Follow-up
visits
‘5301 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
Study population
r/r Multiple Myeloma or Plasma cell leukemia
≥ 2 prior lines of therapy (at least IMiD, PI and anti-CD38)
No prior BCMA-targeted therapy allowed
BCMA, B-cell maturation antigen; DL, dose level; IMiD, immunomodulatory imide drug; PI, proteasome inhibitor; r/
rMM, relapsed/refractory multiple myeloma; RP2D, recommended phase 2 dose.
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Galapagos NV Annual Report 2023
PORTFOLIO
Immunology
By exploring new frontiers in science and technology, we strive to accelerate innovation
of transformational medicines that deliver more years of life and quality of life for
patients and families living with immune-mediated conditions.
We recognize the complexity of developing therapies for immunological diseases, and
that is why we work hand in hand with patients, patient organizations, scientists,
healthcare professionals, research institutions, academia, and other partners to drive
innovation. Our collaborative approach allows us to drive innovation and accelerate
progress toward life-changing treatments.
Our determination to bring hope to patients inspires us to develop targeted treatments
that make a difference to their lives.
Small molecules pipeline
Jyseleca® franchise
On 31 January 2024, we announced the successful completion of the transaction to
transfer our Jyseleca® (filgotinib) business to Alfasigma S.p.A. (Alfasigma).
The transaction includes the transfer of the entire Jyseleca® business to Alfasigma,
including the European and UK Marketing Authorizations, and the commercial, medical
affairs and development activities for Jyseleca®. In connection with the completion of
the transaction, approximately 400 Galapagos positions in 14 European countries
transferred to Alfasigma to support business continuity and ongoing patient access.
Jyseleca® (filgotinib) 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.4
4
Chen Y, et al. Clin Rheumatol. 2019 Mar;38(3):727-738. doi: 10.1007/s10067-018-4340-7. Epub 2018 Oct 19.
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Galapagos NV Annual Report 2023
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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 U.S. Food and Drug Administration (FDA) for the New Drug Application (NDA) for
filgotinib. Consequently, Gilead decided not to advance with resubmission 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.
(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.
Gilead is 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.
In Central and Eastern Europe, Portugal, Greece and the Baltic countries, Swedish
Orphan Biovitrum AB (Sobi) is responsible for the distribution and commercialization of
Jyseleca®.
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Galapagos NV Annual Report 2023
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Jyseleca® reimbursement in RA in Europe
Jyseleca® in RA is currently reimbursed in Western Europe. Sobi secured reimbursement
for Jyseleca® in 2023 in Poland, Slovenia, Slovakia, Estonia, Croatia, and Greece for RA.
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 showed favorable results in terms of onset of action, efficacy, safety, and
tolerability from the FINCH Phase 3 and DARWIN Phase 2 clinical programs.
As part of the filgotinib development program, we initiated FINCH 4 in RA. The FINCH 4
study is a multi-center, open-label, long-term extension study to assess the safety and
efficacy of filgotinib in patients with RA, 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 deep venous thrombosis (DVT)/
pulmonary embolism (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 methotrexate (MTX)/csDMARDs5 in RA.
In 2023, we presented new analyses from randomized controlled trials (RCTs) and real-
world evidence (RWE) studies at the European League Against Rheumatism (EULAR)
congress. These included long-term efficacy and integrated safety data, post hoc
analysis identifying distinct trajectories of treatment responses in patients with RA
filgotinib in patients with RA by
receiving filgotinib,
cardiovascular (CV) risk factors, and the added value of filgotinib on pain relief in patients
with RA achieving remission in the Phase 3 FINCH 1, 2 and 3 studies.
long-term clinical profile of
Furthermore, we published interim results from 500 patients on baseline characteristics
as well as effectiveness and safety outcomes from the FILOSOPHY real-world evidence
study.
5
Conventional synthetic DMARDs
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PORTFOLIO
Jyseleca® (filgotinib) 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.
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 from
at
the
www.info.pmda.go.jp.
Japanese Ministry of Health,
and precautions,
Characteristics
and Welfare
available
available
filgotinib
Product
Labour
found
can
for
be
of
is
is
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. In Central and Eastern Europe, Portugal, Greece and the Baltic countries, Swedish
Orphan Biovitrum AB (Sobi) is responsible for the distribution and commercialization of
Jyseleca®.
Jyseleca® reimbursements in UC
Jyseleca ® in UC is currently reimbursed in Western Europe. Sobi secured reimbursement
for Jyseleca® in 2023 in Poland, Portugal, Czech Republic, Slovakia, Estonia, and Slovenia
in UC.
Safety and efficacy in the filgotinib UC development program
The SELECTION Phase 3 study is a multi-center, randomized, double-blind, placebo-
controlled study to assess the safety and efficacy of the preferential JAK1 inhibitor
filgotinib in adult patients with moderately to severely active UC. The SELECTION study
comprises two induction trials and a maintenance trial. The Induction Study A enrolled
biologic-naïve patients, and the Induction Study B enrolled biologic-experienced
patients.
The primary objectives of SELECTION were to evaluate the efficacy of
filgotinib
compared with placebo in establishing clinical remission as determined by the Mayo
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Galapagos NV Annual Report 2023
PORTFOLIO
endoscopic subscore of 0 or 1, rectal bleeding sub-score of 0, and ≥ 1-point decrease
in stool frequency from baseline to achieve a sub-score of 0 or 1 at Week 10 in the
induction studies and Week 58 in the maintenance study. Eligible patients who were
enrolled in the SELECTION study were enrolled in the ongoing SELECTION long-term
extension trial to evaluate the long-term safety of filgotinib in patients with UC. A majority
of patients included in the SELECTION study (n=1348) had a Mayo Clinic Score (MCS)
of 9 or higher at baseline, and 43% of biologic experienced patients (n=297/689) had
insufficient response to a TNF antagonist and vedoluzimab as well. (Feagan et al., Lancet
2021; 397: 2372–84)
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 an 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 SELECTION
LTE 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 Questionnaire. 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.
On 8 February 2023, we announced that both induction cohorts of the Phase 3 DIVERSITY
study trial of filgotinib in CD failed to meet the co-primary endpoints of clinical remission
and endoscopic response for filgotinib, 100mg and 200mg once-daily. Based on these
topline data, we decided not to submit a Marketing Authorization Application in Europe
for filgotinib in CD.
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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 ex vivo
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).
GLPG3667 is a potent, selective TYK2 inhibitor
HV: healthy volunteer. Source: company data
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PORTFOLIO
No effect on hematological parameters, lipids and CPK
180
160
140
120
100
4
3
2
1
0
8
6
4
2
0
300
200
100
0
10
8
6
4
2
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, 4 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.
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Galapagos NV Annual Report 2023
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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.
GLPG3667 in dermatomyositis (DM)
DM is the most common form of idiopathic inflammatory myopathies (IIM) and
is characterized by inflammatory and degenerative changes of the muscles
and skin. Early symptoms of DM include distinct skin manifestations
accompanying or preceding muscle weakness. The quality of life (QoL) of
patients with DM is impaired due to muscle weakness, pain and skin disease
activity6.
6
Goreshi R, et al. Quality of life in dermatomyositis. J Am Acad Dermatol.2011 Dec;65(6):1107-16.
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In April 2023, we announced that the first patient was dosed in GALARISSO, the Phase 2
study with GLPG3667 in DM patients. Topline results of the GALARISSO study are
expected in 2025.
GALARISSO Phase 2 study design with GLPG3667 in DM
Screening
‘3667 oral (n=31)
Placebo (n=31)
24 weeks
Follow-up
4 weeks
Adults with active dermatomyositis and reduced muscle stregth
Primary endpoint: proportion of subjects with improvement at Week 24 according to ACR/EULAR criteria*
Secondary endpoints: change from baseline in m-CDASI-A, safety/tolerability, PK
GALARISSO is a Phase 2 randomized, double-blind, placebo-controlled, multi-center
study to evaluate the efficacy and safety of GLPG3667. A daily oral administration of
GLPG3667 150mg or placebo will be investigated in approximately 62 adult patients
with DM over 24 weeks. The primary endpoint is the proportion of patients with at least
minimal improvement in the signs and symptoms of DM at Week 24 according to the
American College of Rheumatology (ACR) and the European League Against Rheumatism
(EULAR) criteria7.
GLPG3667 in systemic lupus erythematosus (SLE)
SLE is a chronic, inflammatory, autoimmune disease affecting nearly every
organ system and thereby one of the most heterogeneous illnesses treated
by physicians. The pathogenesis of SLE is characterized by a global loss of
self-tolerance with activation of autoreactive T and B cells. This leads to the
production of pathogenic autoantibodies that primarily target a variety of
nuclear antigens, deposit in tissues and activate complement, resulting in
organ damage.
In August 2023, we announced that the first patient was enrolled in GALACELA, the
Phase 2 study with GLPG3667 in patients with SLE. Topline results of the GALACELA study
are expected in 2026.
7
Minimal improvement per ACR/EULAR is defined as a total improvement score (TIS) of >= 20 points. The TIS is a score derived from the
evaluation of the results from 6 core set measurements of myositis disease activity.
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GALACELA Phase 2 study design with GLPG3667 in SLE
Screening
‘3667 oral
Placebo
48 weeks
Follow-up
4 weeks
Adults with active systemic lupus erythematosus (N≈140)
Primary endpoint: proportion of subjects with improvement at Week 32 according to SLE Responder Index (SRI)-4
Secondary endpoints: proportion of subjects achieving BICLA, CLASI-A, LLDAS scores, joint count readouts,
safety/tolerability, PK
GALACELA is a Phase 2 randomized, double-blind, placebo-controlled, multi-center study
to evaluate the efficacy, safety, tolerability, pharmacokinetics, and pharmacodynamics of
GLPG3667 in adults with active SLE. A once-daily oral administration of GLPG3667 or placebo
will be investigated in approximately 140 adult patients with SLE for 32 weeks.
The primary endpoint is the proportion of patients who achieve the SLE responder
index (SRI)-4 response at Week 32.
The secondary efficacy endpoints are the proportion of patients who achieve the British
Isles Lupus Assessment Group (BILAG)-based Composite Lupus Assessment (BICLA)
response at Week 32, proportion of patients with >=50% reduction in Cutaneous Lupus
Erythematosus Disease Area and Severity Index Activity (CLASI-A) score at Week 16,
proportion of patients who achieve Lupus Low Disease Activity State (LLDAS) at Week
32 and change from baseline in the 28-joint count for tender, swollen, and tender and
swollen (active) joints at Week 32.
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Galapagos NV Annual Report 2023
Risk factors
Description of the risks
for investors
Pioneering science to
transform patient outcomes
RISK FACTORS
Detailed description of the risk factors
in Form 20-F
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. Our annual report on 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. For a
comprehensive, detailed description of the Risk factors, we refer to Form 20-F.
Risks related to product development and
regulatory approval
Operating procedures, monitoring and prioritizing
product candidates
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, we must and have in the past and during the financial year 2023 decided
to prioritize the development of certain product candidates; these decisions may prove
to have been wrong and may adversely affect our business.
Strongly dependent on the success of clinical
product candidates and the discovery portfolio
We are heavily dependent on the success of our product candidates, such as GLPG5101,
GLPG5201, GLPG5301 and GLPG3667. As of year-end 2022, we implemented a new
innovation R&D model focusing on the therapeutic areas of oncology and immunology.
Following the strategic review announced in August 2023, we transferred the commercial,
medical affairs and development activities regarding filgotinib to Alfasigma in January 2024.
In addition, we are heavily investing in an early-stage product candidate pipeline, including
small molecules and oncology preclinical candidates, 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.
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New and complex innovative cell therapies
Through the acquisitions of CellPoint and AboundBio, we gained access to an innovative,
scalable, decentralized and automated point-of-care CAR-T 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.
Unpredictable commercial viability of the product
candidates
Our business and future success is substantially dependent on our ability to develop
successfully, obtain regulatory approval for, and then successfully commercialize our
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 our product candidates, including our CD19 CAR-T product
candidates, will be completed in a timely manner, or at all. If any of our product
candidates are not approved and commercialized in certain jurisdictions, we will not be
able to generate any product revenues for that product candidate.
Lengthy, time-consuming regulatory processes
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.
Expensive clinical development process with
uncertain outcome
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 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.
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Galapagos NV Annual Report 2023
RISK FACTORS
Patient enrollment influence
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.
Product candidates may cause undesirable side
effects or serious adverse events
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.
Patients receiving T cell-based immunotherapies may experience serious adverse
events, including neurotoxicity and cytokine release syndrome. Serious adverse events
or undesirable side effects associated with our CAR-T product candidates may result in
delays, clinical holds, or terminations of our preclinical or clinical trials, impact our ability
to obtain regulatory or marketing approval, and impact the commercial potential of such
product candidates, which would significantly harm our business, financial condition
and prospects.
Public perception may be influenced by claims that cell therapy, including cell editing
technologies, is unsafe, or unethical, and research activities and adverse events in the
field, even if not ultimately attributable to us or our CAR-T product candidates, could
result in increased governmental regulation, unfavorable public perception, challenges
in recruiting patients to participate in our clinical studies, potential regulatory delays
in the testing or approval of our CAR-T product candidates, labeling restrictions for
any future approved CAR-T products, and a decrease in demand for any such product.
For example, in November 2023, the FDA announced that it would be conducting an
following BCMA-directed or
investigation into reports of T-cell malignancies
CD19-directed autologous CAR-T cell
immunotherapies following reports of T-cell
lymphoma in patients receiving these therapies. The FDA also stated that patients and
clinical trial participants receiving treatment with the currently approved BCMA-directed
and CD19-directed genetically modified autologous CAR-T cell immunotherapy products
In January 2024, the FDA
should be monitored life-long for new malignancies.
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Galapagos NV Annual Report 2023
RISK FACTORS
determined that new safety information related to T-cell malignancies should be
included in the labeling with boxed warning language on these malignancies for all
BCMA- and CD-19-directed genetically modified autologous T-cell immunotherapies.
Additionally, EMA’s PRAC started a signal procedure to review data on secondary
malignancies related to T-cells (cancers that begin in a type of white blood cells called
T-cells),
lymphoma and leukemia, for the six approved CAR-T cell
medicines. More restrictive government regulations or negative public opinion would
have a negative effect on our business or financial condition and may delay or impair
the development and commercialization of our CAR-T product candidates or demand
for any approved products.
including T-cell
If we are not able to obtain orphan product exclusivity, 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.
Extensive ongoing regulatory requirements
If the FDA, EMA, or any other comparable regulatory authority approves any of our
product candidates, the manufacturing processes, distribution, adverse event reporting,
storage, advertising, and recordkeeping for the product will be subject to extensive and
ongoing regulatory requirements. 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. For example,
the FDA stated in its January 2024 final guidance document titled “Considerations for
the Development of Chimeric Antigen Receptor (CAR) T Cell Products” that subjects
in clinical trials treated with CAR-T cells containing an integrated transgene should be
monitored for 15 years after treatment. Failure to comply with the aforementioned
practices may harm our clinical trials or regulatory process and by extension, our
business, financial condition and prospects.
Before we can begin to commercially manufacture our product candidates for human
therapeutics, the FDA must review for the applicable manufacturing process and
facilities as part of its review of our marketing application. This will likely require the
manufacturing facilities to pass a pre-approval inspection by the FDA. A manufacturing
authorization must also be obtained from the appropriate EU regulatory authorities or
other comparable regulatory authorities.
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.
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Risks related to commercialization
The marketing and sale of filgotinib or future approved products may be unsuccessful or
less successful than anticipated. We are dependent on the agreed and ongoing transfer
to Alfasigma of the European MA for filgotinib, which is approved for the treatment of RA
and UC in Europe and Japan.
Degree of market acceptance
The commercial success 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. 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.
Potential adverse effect of coverage and
reimbursement decisions
Coverage and reimbursement decisions by third-party payers may have an adverse
effect on pricing and market acceptance of newly approved drugs. 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.
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Public perception and increased regulatory scrutiny
Public perception may be influenced by claims that cell therapy, including cell editing
technologies, is unsafe, or unethical, and research activities and adverse events in the
field, even if not ultimately attributable to us or our CAR-T product candidates, could
result in increased governmental regulation, unfavorable public perception, challenges
in recruiting patients to participate in our clinical studies, potential regulatory delays in
the testing or approval of our CAR-T product candidates, labeling restrictions for any
future approved CAR -T products, and a decrease in demand for any such product.
Risks related to our financial position and
need for additional capital
Biotechnology market
We are a global biotechnology company with limited sales experience, limited historical
profit from product sales and limited historical data on product revenues. Except for
the commercial launch of filgotinib, our operations have been limited to developing
our technology and undertaking preclinical studies and clinical trials of our product
candidates.
Significant operating losses
Since our inception, and with the exception of the years 2019 and 2023, we have incurred
significant operating losses. Our losses resulted principally from costs incurred in
research and development, preclinical testing, clinical development of our product
candidates as well as costs incurred for research programs, (pre-)commercial activities,
launch of Jyseleca®, and from general and
primarily related to the commercial
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.
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.
Additional funding may be required
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
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operations or require us to relinquish rights to our product candidates or technologies.
The incurrence of additional indebtedness could result in increased fixed payment
obligations and could also result in certain additional restrictive covenants that could
adversely impact our ability to conduct our business.
For further reference on financial risks in particular, see note 33 of the notes to the
consolidated financial statements.
Risks related to our reliance on third
parties
Strongly dependent on collaboration agreements
with Gilead and certain other 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 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 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 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
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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
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.
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Potential limitation on future development and
commercialization collaborations
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
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.
Through the acquisitions of CellPoint and AboundBio, we gained access to an innovative,
scalable, decentralized and automated point-of-care cell therapy manufacturing model
as well as a 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, 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.
Reliant on third party supply of materials
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
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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.
No assurance that arrangements will deliver
expected results or benefits
We have relied on and plan to continue to rely on contract research organizations, or
CROs, to monitor and manage data for our preclinical and clinical programs. We and
our CROs also rely on clinical sites and investigators for the performance of our clinical
trials in accordance with the 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.
Reliant on third party clinical data and results
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.
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Risks related to our intellectual property
Our ability to compete may decline if we do not adequately protect our proprietary
rights.
We endeavor to protect our proprietary technologies and know-how by entering into
confidentiality and proprietary information agreements with our employees and
partners, and by setting up special procedures (e.g. with respect to the handling of the
laboratory books).
The proprietary nature of, and protection for, our product candidates, their methods
of use, and our platform technologies are an important part of our strategy to develop
and commercialize novel medicines. We have obtained patents relating to certain of
our product candidates and are pursuing additional patent protection for them and for
our other product candidates and technologies. We also rely on trade secrets to protect
aspects of our business that are not amenable to, or that we do not consider appropriate
for, patent protection. Additionally, we have registered and unregistered trademarks,
including amongst others our company name.
As of March 1, 2024, Intellectual property rights held by Galapagos NV relating to our
product candidates include the following:
GLPG5101 product candidate: GLPG5101 is currently being developed in our point-
of-care model for the treatment of relapsed/refractory NHL. For this model, we have
obtained an exclusive worldwide license from Lonza AG to use the Cocoon® for the
the treatment of hematological
therapy for
commercial manufacture of cell
malignancies at the point-of-care.
GLPG5201 product candidate: GLPG5201 is currently being developed in our point-
of-care model for the treatment of relapsed/refractory CLL and RT. For this model, we
have obtained an exclusive worldwide license from Lonza AG to use the Cocoon® for
the commercial manufacture of cell therapy for the treatment of hematological
malignancies at the point-of-care. We also have a license and supply agreement on the
materials to produce and use our GLPG5201 product candidate.
GLPG5301 product candidate: GLPG5301 is currently being developed in our point-
of-care model for the treatment of relapsed/refractory MM. For this model, we have
obtained an exclusive worldwide license from Lonza AG to use the Cocoon® for the
commercial manufacture of cell
the treatment of hematological
therapy for
malignancies at the point-of-care. We also have an exclusive license and supply
agreement on the materials to produce and use our GLPG5301 product candidate.
GLPG3667 product candidate: We have a granted U.S. patent application, and one
pending U.S. patent application. We have one patent granted via the European Patent
Office (EPO) and one pending patent application at the EPO; as well as further granted
patents inter alia in Japan and Australia. In addition, we have counterpart foreign patent
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applications that are pending in Canada, China and other foreign countries claiming
GLPG3667 compositions of matter and methods of treatment using GLPG3667. Patents, if
any, that issue based on this pending patent application are estimated to expire in 2038,
not including any potential extensions for the marketed product that may be available
via supplementary protection certificates or patent term extensions. We also have one
U.S. pending patent application as well as other foreign jurisdictions claiming dosage
regimen, and any patent, if granted is estimated to expire in 2042. Finally, we have four
pending applications under the Patent Cooperation Treaty (PCT) disclosing solid forms,
metabolites, and/or methods for treating inflammatory disorders using GLPG3667; any
patents, if granted, based on these patent applications are estimated to expire in 2043.
Third parties may claim for wrongfully used or
disclosed proprietary rights
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 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.
Time consuming and costly infringement procedures
can harm our business
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.
Possible negative impact of developments in patent
law or jurisprudence
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
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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.
Targeted and (cost) efficient intellectual property
protection
We will not seek to protect our intellectual property rights in all jurisdictions throughout
the world and we may not be able to adequately enforce our intellectual property rights
even in the jurisdictions where we seek protection.
Filing, prosecuting and defending patents on our product candidates in all countries and
jurisdictions throughout the world would be prohibitively expensive, and our intellectual
property rights in some countries could be less extensive than those in the United States
and Europe. Consequently, we may not be able to prevent third parties from practicing
our inventions in all countries, or from selling or importing products made using our
inventions.
Legal uncertainty around new European Unitary
Patent Court
The Unitary Patent Court (UPC) was opened in June 2023, being competent in matters
of patent litigation. New case law will emerge and require risk evaluating and mitigating
regarding certain intellectual property rights.
Risks related to our competitive position
Intensive competitive sector
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.
In the field of dermatomyositis (DM), physical therapy, exercise and medication including
recently immunoglobulin treatment are
corticosteroids,
commonly used to treat DM. Treatment of this disease has relied for many years on off-
immunosuppressants or
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label medication. Additionally, in 2021 the FDA approved immunoglobulin treatment
Octagam®, based on the Phase 3 ProDerm trial of Octapharma.
In the field of SLE, corticosteroids, antimalarials and immunosuppressants are
commonly used to control lupus disease activity. Only two products are approved to
treat SLE, both as add-on to standard therapy: Belimumab (Benlysta®) (anti-BAFF) from
GSK and recently anifrolumab (Saphnelo®) (anti-IFN) from Astra Zeneca. There are
currently over 10 products in Phase 3 for SLE, of which the minority are oral –
deucravacitinib (SotyktuTM) (TYK2) from BMS, upadacitinib (JAK) from Abbvie and
cenerimod (S1P1) from Idorsia/Viatris.
(including but not
In the field of hematologic malignancies, such as Non-Hodgkin’s Lymphoma (NHL),
Chronic Lymphocytic Leukemia (CLL) and Multiple Myeloma (MM), there are many
approved therapies or therapies in development
limited to
chemotherapy, BTKi, antibodies, bispecific antibodies, antibody drug conjugates, CAR-
Ts, cytokines, NK and T-cell engagers, etc.) and many different types of cell therapy
in development (allogeneic/autologous, T/NK/CAR-NK, TIL, TCR-T, dendritic, etc.). As
a consequence, we are operating in a highly competitive, and rapidly evolving
environment. New technologies and therapies such as invivo modification of immune
cells may further disrupt this market in the mid-to-long-term. Six CAR T treatments have
been approved for hematological cancers in the US and Europe: Novartis’ Kymriah®
(CD19 CAR T), Gilead/Kite’s Yescarta® (CD19 CAR T), Tecartus® (CD19 CAR T), J&J’s
Carvykti® (BCMA CAR T) BMS’ Breyanzi® (CD19 CAR T) and Abecma® (BCMA CAR T).
Additionally, 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 candidates. If we, our 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.
Risks related to our organization, structure
and operation
Continuous required successful attracting and
retaining qualified personnel
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,
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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 and medical organizations,
including in the field of oncology, we will require significant additional investment in
personnel, management and resources. Our ability to achieve our research and
development 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.
Potential product or product candidates
manufacture and production issues
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 manufacturing 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
the normal process, could result in product defects or manufacturing failures that can
result in lot failure or product liability claims.
including (without
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.
Information technology systems
Our, our third party partners’ or vendors’, information technology systems and networks
could face serious disruptions or suffer security breaches that could adversely affect our
business. We rely on both internal information technology (IT) systems and networks,
and those of third parties and their vendors, to process and store confidential and
sensitive data, including confidential research, business plans, financial information,
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intellectual property, patient data, customer data and personal data that may be subject
to legal protection. The extensive information security and cybersecurity threats, which
affect companies globally, pose a risk to the security and availability of these IT systems
and networks, and the confidentiality, integrity, and availability of confidential and
sensitive data.
We continuously assess these threats and make investments to increase internal
protection, detection, and response capabilities, as well as to increase our third party
providers’ capabilities and controls to address this risk.
However, because of the frequently changing attack techniques, along with the
increased volume and sophistication of the attacks, there is the potential risk for us to
be adversely impacted. Although we have invested time and resources in the protection
of its information technology and other internal infrastructure systems, we and our
vendors, like other companies in the industry, have experienced attacks from time to
time, and we and our vendors may experience other such attacks in the future.
The impact of security breaches and significant disruption in the availability of our
information technology and networks could result
in reputational, competitive,
operational or other business harm, financial costs, litigation (including class action
investigations, fines, penalties, audits and
claims), regulatory action (for example,
inspections), as well as interruptions in our collaborations with our partners, and delays
in our research, development work, regulatory approval efforts and other work.
Potential non-compliances with evolving privacy and
data protection laws and requirements
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.
New risks and challenges connected to increasing
social media usage
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
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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.
Strategic acquisitions can result in integrating
difficulties, or may not realize the intended
advantages
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.
Impact of Sustainability or Environmental Social
Governance (ESG) regulations and potential impact
or exposure
Our business and operations are subject to numerous human rights, corruption,
environmental, sustainability, health & safety laws and regulations. On the basis of our
activities and the requirement to use hazardous materials, we could incur significant
costs and reputational loss associated with civil and criminal fines and penalties.
Although we maintain workers’ compensation insurance, this may not provide adequate
coverage against potential claims and liabilities.
Additionally, we may incur substantial costs in order to comply with the existing and
future Sustainability and ESG regulations or permitting requirements. At the date of this
report, we are subject to the EU’s Corporate Sustainability Reporting Directive (CSRD).
We are required (starting next financial year) to report on a broad range of sustainability
KPI’s and to formulate long-term ESG targets , policy and strategic plans under a double
materiality principle. These current and future laws, regulations and permitting
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requirements may impair our business, and failure to comply with them can result in
substantial fines, penalties or other sanctions.
Impact of tax legislative changes and exposure to tax
liabilities
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 2023 we had €390.3 million of carry-forward innovation income deduction
in Belgium.
Our inability to qualify for the abovementioned advantageous tax regimes, as well as
the introduction of the minimum taxable base and any other future adverse changes
of Belgian tax legislation, may adversely affect our business, results of operations and
financial condition.
We have received several technological innovation grants to date 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.
(In)accurate budget and performance
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
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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.
Natural disasters and geopolitical events and their
disruptive effects
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 and other economic and political events
or conditions (such as the armed conflict between Russia and Ukraine or the conflict
between Israel and Gaza), 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. 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.
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.
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Dilution through exercise of subscription right plans
The exercise of existing subscription rights can significantly increase the number of
outstanding Galapagos shares.
Inability to distribute dividends
We have a limited operating history, and future profitability cannot be guaranteed.
Galapagos NV has significant losses carried-forward, and will thus not be able to
distribute dividends in the near future. This can cause people to refrain from
investing in Galapagos’ shares.
Reputational damage
High ethical standards are maintained throughout the entire organization at all
levels. Laws and guidelines are complied with. Our suppliers are required to adhere
to contractual terms which include anti-bribery and anti-corruption provisions. In
addition, our external consultants are required to comply with our Code of 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.
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Sustainability
report
Our commitment to society:
Forward, Sustainably
Pioneering science to
transform patient outcomes
SUSTAINABILITY REPORT
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 improve 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 strongly believe that our patient focus is supported by our commitment to the health
of our planet and the wellbeing of our employees. In line with this, we are extending our
commitment 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.
Our approach to Sustainability is encapsulated in the principle “Forward,Sustainably,”
our strategy designed to bring the values of ethical, responsible innovation into
everything we do, from how we develop patient therapies to how we collaborate with
our colleagues, partners and other stakeholders. 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.
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Our Ambition
Informed by the results of our materiality assessment, in 2023, we worked on identifying
KPIs and defining targets to reach our 2028 call for action, as depicted in the graph below.
Our commitment to our call for action by 2028 remains unchanged, and we are reviewing
the underlying targets and action plans to reflect the impact of the Jyseleca® transfer
transaction that was completed at the end of January 2024.
The updated targets will provide the basis for our sustainability reporting as of 2024.
Our call for action by 2028
Add more years of life and
quality of life for patients
Develop transformational
therapies for patients,
with patients and the
healthcare community
Provide patient
access globally
Be a diverse, equitable
and inclusive,
and trusted organization
Be climate neutral
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Our Sustainability Governance
In 2022, supported by the members of our Executive Committee, we established a
Sustainability Steering Committee, composed of cross-functional representatives and
leaders from within our organization. The Sustainability Steering Committee ensures
that environmental, social, and governance considerations are fully integrated into our
including those related to our business strategy, key
decision-making processes,
investments, and performance. The Committee consists of members of senior
management and subject matter experts covering key areas of our operations, including
Compliance, Patient Advocacy, Legal, Finance, Environment, Health & Safety (EHS),
and
Procurement, Human Resources,
Communications.
Investor Relations,
Site Operations,
The Executive Committee oversees the Sustainability Steering 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
(Environmental, Social and Governance) matters.
Our Double Materiality Assessment
Driven by our purpose to transform patient outcomes through life-changing science
and innovation, we understand that our business actions impact both society and our
financial performance.
To determine our key goals and priorities, we conducted an impact materiality
assessment in 2022, which enabled us to identify the topics most relevant to our internal
and external stakeholders. The analysis provided insights into our potential impact on
society and the world, allowing us to better monitor emerging business challenges and
opportunities.
To enhance the value of the 2022 materiality assessment, we updated the methodology
we applied for the 2018 assessment and significantly increased the number of
stakeholders involved. Externally, we engaged with representatives from patient
organizations, patient experts, healthcare providers, supply chain partners, our
collaboration partners, and investors. Internally, in addition to the members of our
Executive Management and our Sustainability Steering Committee, all employees were
given the opportunity to provide input on 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 the five topics they found most relevant, five topics they found
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less important for Galapagos and our core mission, and the opportunity to share any
additional material topics that were not part of the initial list.
The results corroborate the results from previous years, with the top three pillars
clustered around People, Planet, and Trust & Transparency. The 2022 assessment
identified a new pillar dedicated to Patients.
The materiality map below shows our stakeholder’s material topic priorities:
Materiality analysis
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
Double materiality
In 2023, in order to meet the requirement introduced by the Corporate Sustainability
Reporting Directive (CSRD), we completed a first iteration of the double materiality
assessment by adding, next to the impact materiality assessment, a financial materiality
assessment. The results of this iteration confirmed our initial assessment, and stated
pillars: Patients, our People, Trust and Transparency, and Planet. In 2024, we aim to
update the double materiality assessment to reflect the impact of the transfer of the
Jyseleca® business to Alfasigma.
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Our Pillars
At Galapagos, our commitment to society 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.
Our ambition is to bring transformational medicines to patients across the globe for
more years of life and quality of life, through active engagement with patients and
the healthcare community. This commitment is reflected in our pioneering research,
product development, and pursuit for patient access to our innovative medicines.
Pillars of Sustainability
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Patients
Our
Commitment
to Patients
We are engaged. Our commitment to developing
transformational medicines that create more years of life
and quality of life For Patients, With Patientsand the
healthcare community around the world
We value continuous improvement in our approach to research, development, and
healthcare access, with an unwavering focus on outcomes that deliver the greatest value
to patients. We embrace change and support disruptive innovation, strive to build a
culture of responsible innovation throughout a medicine’s entire lifecycle and are
committed to ensuring the safe and appropriate use of our medicines, if approved, as
may be prescribed by physicians and used by patients in medical practice.
We focus our development efforts on areas where we have deep expertise and map out
the shortest path to market with the objective of reducing the time it takes to bring new
medicines to patients.
At every stage of the patient journey, we aim to collaborate closely with patient
organizations, beginning in the clinical study design. Through these efforts, we aim
to maintain a clear line of communication with patients, having a significant positive
impact on their experiences with our studies.
In 2021 we co-developed our Patient Partnership Charter with the patient community
to formalize our commitment to patient engagement. Using the Charter as a guideline,
we defined our roadmap to integrate patient engagement systematically throughout the
medicine lifecycle.
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 easy to
understand, and our commitment
to Open Access publishing enables us to
communicate clearly and effectively with all our stakeholders.
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Furthermore, since 2020, we have been an active member of the Open Pharma
initiative, a first-of-its-kind 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 2023
We have
Invested in building up early relationships with patient organizations in relevant
therapeutic areas;
Co-created the following internal and external, patient focused resources with the
Galapagos Patient Engagement Council (PEC) :
A standardized list of questions on patient-relevant endpoints;
The patients & caregivers page on our corporate website;
A dedicated Galapagos job aid focused on assisting colleagues who work with
patients;
Template letters for patient organizations and sites to communicate time-
sensitive information;
Systematically embedded the patient and the clinical site expectations into our late
phase immunology studies;
Rolled out an internal guidance document on how to share study treatments
systematically with participants;
Written and tested lay summaries of clinical trials’ results with patients for all studies
started after June 2022;
Maintained strong engagement with relevant patient organizations at key congresses;
Involved patient representatives in the steering committees of all our Phase 4 real
world evidence studies;
Supported the initiatives led by patient organizations during relevant disease
awareness days;
Held trainings for in-field personnel with patients;
Organized the very first Galapagos Patient Partnership Day on 15 November 2023;
Incorporated the health literacy principles in our key documents for clinical trial
participants;
Published plain language summaries in Galapagos driven scientific manuscripts
disclosing data from clinical-stage trials;
Enabled continued access to Jyseleca® for patients across Europe following the
transfer of Jyseleca® and the related commercial activities to Alfasigma; and
Begun our efforts to increase patient access through the decentralized CAR-T
manufacturing network.
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Our People
Our
Commitment
to our People
We are purpose driven. Our commitment is to create a
Purposeful Workplace for our Peopleto deliver
breakthrough innovation for patients
2023 was a year of significant change and continued transformation for Galapagos, and
we are well aware of the impact this has on our employees and the challenges that it
poses to our organization.
First, to continue building our company around two core therapeutic areas, oncology
and immunology, we completed the integration of the CellPoint and AboundBio teams
into Galapagos with a robust onboarding program. In late June, we also completed the
transfer of the drug discovery and research activities, including our research colleagues
in Romainville, France, to NovAliX.
Next, after carefully evaluating the strategic options to maintain a sustainable
commercial business model for Jyseleca®, our Jyseleca® dedicated teams, and the
patients who benefit from the medicine, we signed a letter of intent with Alfasigma S.p.A.
to transfer the entire Jyseleca® business to Alfasigma, including the European and UK
Marketing Authorizations, as well as the commercial, medical affairs and development
activities for Jyseleca® and approximately 400 Galapagos positions in 14 European
countries. The transaction was completed at the end of January 2024.
to further streamline our
remaining operations and implement a lean
Finally,
organization focused on R&D growth areas, we announced and implemented a
restructuring affecting 100 positions across our European sites. At the same time, we
continue to strengthen critical strategic capabilities to achieve our ambitions in
oncology.
To ensure we were hearing our employee’s thoughts during this time of change, we
conducted a company-wide survey to better understand the impact of these changes
on our company’s values and culture. More than half of our employees participated in
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the survey and we are committed to taking the feedback to further evolve our corporate
culture and values in 2024.
We are pleased to share the efforts we have taken to foster an inspiring and engaging
workplace for our people. We strive to nurture a purpose-driven culture that values
diversity, equality, transparency, trust, empowerment, and leadership. We continue to
build an inclusive and entrepreneurial work environment, where people can be
themselves, realize their full potential and grow in their career, feel recognized for their
contributions, and perform to the best of their abilities, individually and together as one
team.
HIGHLIGHTS 2023
Diversity, equality, and inclusion
As part of our Sustainability strategy, we kicked off a program to create more awareness
for diversity, equality and inclusion within Galapagos.
We are proud to share that, for the fourth year in a row, we are included in the 2023
Bloomberg Gender-Equality Index. This list encompasses 484 companies headquartered
in 45 countries and regions. It is an objective measure that tracks gender equality across
inclusive culture, anti-sexual harassment
five pillars:
policies, external brand, and equal pay & gender pay parity.
leadership & talent pipeline,
As part of our effort to foster equal pay and gender pay parity, we perform equity checks
during our promotion and end-of-year review processes across genders to mitigate
potential bias. In 2023, among other initiatives to promote the culture of inclusion across
our organization, we held a plenary panel talk with Pips Bunce, inspirational advocate
for Diversity, Equality and Inclusion. The widely attended session generated a fruitful
discussion and exploration of how a more diverse and inclusive organization can lead to
a greater success.
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Total workforce*
1,123
female
56%
male
44%
3.9
Average # years
length of service
44%
45% are
45+ years old
new hires
2023
56%
43
# Nationalities
AVERAGE AGE
44
22%
new hires are
<30 years
Senior
leadership
Middle
management
Individual
contributors
57%
121
43%
47%
630
53%
30%
276
70%
12%
Voluntary
employee
turnover
% female
% male % other
*Total workforce number includes in-sourced consultants
Talent attraction
levels of the
We continue to strive for a balanced, diverse talent mix across all
organization and are focused on continuing to attract and develop a diverse workforce.
As part of this effort, our vacancies are screened by verified language models to ensure
‘neutral language’, and all job posting include an explicit encouragement for all genders,
ages, and nationalities to apply. Our talent acquisition strategy includes active outreach
to diverse talent groups and is supported by our internship programs that help us to
attract and grow young professionals. In 2023, we hired 193 new employees, bringing our
total workforce count to 1,123 people.
Talent retention
We also know that it is equally important to engage, develop and retain top talent,
which is why we have heavily invested in re-engaging our Discovery teams at the start
of 2023. We also rolled out a new initiative of “Team Boosters,” which are offsite team
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development sessions for complete teams and their leader, with the objective to boost
engagement and belonging, guiding all leadership and functional teams within the
Discovery organization on a targeted development journey.
Talent cycle is our annual cycle of specific conversations between managers and their
direct reports on topics like objectives, feedback, development; this fosters an open
dialogue between managers and employees. We hold regular “Hay! (How Are You)
conversations” between managers and their team members to support ongoing
feedback and discuss topics such as goal alignment, engagement, feedback, career,
performance, and development.
In addition to facilitating these individual
conversations, we broadened the “Talent Talks” to the departmental level to focus on
identifying personal development opportunities for employees.
We believe that by proactively offering learning opportunities to all employees, we
invest in employees’ career growth at Galapagos. In 2023, Galapagos employees and
leaders attended more than 4,500 Galapagos learning and development events (and
this number excludes Compliance training, conferences and on-the-job learning).
Additionally, almost 50 managers spent in total over 2,500 hours on individual coaching
conducted by an external consultant.
Compensation
Another critical element to retain employees is our competitive compensation offering,
which is designed to recognize and reward employee performance in alignment with the
company’s strategy and culture. We believe that performance bonuses and stock-based
incentive opportunities help drive sustainable performance and stronger commitment
to Galapagos, while appropriately rewarding employees for their contributions to our
success.
The benefits we offer vary from country to country, based on local standards and
statutory requirements. In 2023, we enhanced our employee offerings at both the
international and country level with the following changes:
Expanded information about total rewards, including benefits offerings, available to
employees on our intranet portal;
Provided stock-based awards for our colleagues to foster ownership culture;
Conducted extensive benchmarking to assess the competitiveness of our local
benefits offerings;
Improved various local benefits offerings ranging from additional time off and cash
allowances to improved meal vouchers and new wellbeing programs; and
Strengthened our commuter and transportation programs offerings to further
incentivize environmentally sound transportation choices.
Wellbeing
We prioritize the health of our workforce as it is essential for both individual success
and overall organizational prosperity. Our cross-functional initiative known as “Make
It Happiness” brings together employee ambassadors who continuously design and
improve our global wellbeing program. This project is centered around three key pillars:
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Physical, Mental, and Social wellbeing. The program aims to enhance team unity, as
employees are encouraged to participate in activities such as sharing healthy meals,
Company Culture strengthening, volunteering for social causes, and listening to
inspirational speakers. The “Make It Happiness” team also offers all employees access
to the Headspace App, with our employees using over 74,000 minutes of content and
meditation programs in 2023.
Engagement
Beginning in 2024, we are starting to monitor our culture, values, and employee
engagement in a new annual company-wide Employee Survey. Following localized
team-specific wellbeing surveys in the past, we are now prepared to rollout a global
assessment, which will quantify the Galapagos employee experience and provide
valuable insights into several dimensions of our culture such as engagement, intent to
stay, and leadership effectiveness. The results of this survey, expected to launch in the
first half of 2024, will serve as a baseline benchmark and starting point for constructive
and ongoing dialogue with our teams.
Health and Safety
In line with our Environmental, Health and Safety (EHS) policy, we are dedicated to
providing safe and healthy working conditions to all our employees. In 2023, we had no
fatalities related to work-related injuries or work-related ill health, nor did we have any
high consequence work-related injuries.
The table below provides an overview of safety incidents for Galapagos employees,
consultants working on site, temporary workers and students in 2023:
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
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Planet
Our
Commitment
to the Planet
We are conscientious. Our Commitment to the Health of Our
Planet
The planet health and the health and wellbeing of (our) people are interconnected.
As climate change was specifically identified as a material topic to Galapagos, we set a
clear aspiration to support our environmental ambitions and become climate neutral by
2028. We defined a 5-year roadmap to achieve this goal, applying a sound and realistic
mix of carbon reduction and carbon compensation projects.
In addition, we are
embracing the circular economy by reducing waste and reusing or recycling materials
where and when we can.
As the reduction of green-house gas emissions is a crucial success factor in our
approach, our reduction roadmap entails three pathways.
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 by raising environmental awareness among our employees.
Our Environmental, Health and Safety oversight group has developed and maintains
an EHS management system based on the international ISO 140019 and ISO 4500110
standards to ensure that our approach is planned, consistent, transparent, compliant
and measurable.
Actions 2023
To detail our path towards being climate neutral, we took the following actions in 2023:
9
10
International Standard Organization 14001: Environmental management systems (EMS)
International Standard Organization 45001: Occupational health and safety (OH&S) management
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We quantified the carbon footprint of Galapagos’ value chain (including Scope 111,
212 and 313 CO2e emissions), in accordance with the Green House Gas Protocol (see
Appendix table)
We defined and quantified energy mix and energy consumption related to our Scope
1 and Scope 2 CO2e emissions (see Appendix table). Energy generated from
renewable sources currently covers 25% of our total energy needs.
Progressed on our three pathways to reducing greenhouse gas emissions as defined
in multi-year reduction roadmap :
Systematically replacing any fossil fuels by renewable energy sources:
in 2023 we launched a new mobility strategy aimed at accelerating the
electrification of our car fleet and offering alternative transportation modes.
In Belgium, home of our biggest company car fleet, we piloted this effort
through the implementation of a new requirement that all new fleet vehicles
must be fully electric as of 1 May 2024.
Improving energy efficiency of our operations.
we defined our expectations for BREEAM14 and WELL15 performance levels, for
future consideration in selection criteria for new Galapagos facilities, an effort
to improve our energy efficiency performance.
in 2023, 23% of the heated surface used by Galapagos was BREEAM or WELL
certified.
Driving behavioral change and raising environmental awareness among our staff:
we continued the work of the Green Teams in our research sites. These teams
of volunteers identify opportunities to reduce Galapagos’ footprint in our day-
to-day operations.
we celebrated the United Nations’ World Environment Day on June 5th, by
organizing site-specific activities such as a bikers’ lunch, bike repair and waste
recycling workshops.
We also organized a global webinar featuring Bertrand Piccard, who shared
his experience as a psychiatrist, green pioneer, and founder of the Solar
Impulse Foundation.
We completed a Life Cycle Assessment for Jyseleca®, defining the environmental
footprint of one year of treatment.
As indicated by our ambitious goal of being climate neutral by 2028, we are
committed to doing our part to support a healthy planet and will continue to monitor
our performance to ensure we remain on track on our five-year roadmap.
11
12
13
14
15
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 - Building Research Establishment Environmental Assessment Methodology is a sustainability assessment for master planning
projects, infrastructure, and buildings. 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.
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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 work to ensure that
we act in the best interest of patients, people, and the planet. We build trust with our
stakeholders by setting measurable goals, communicating them clearly, and being open
and transparent about the progress we are making to deliver on them – both when we
are doing well and when we need to make improvements.
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 that 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. Additionally, we continuously 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 expectations across our company.
To ascertain that 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 and maintain compliance with all applicable laws.
We nurture a speak-up culture that encourages every one of our employees to share
ideas, while also supporting our managers and leaders to embody a “Listen Up” culture.
We implemented a "Speak Up" web-based reporting system to enable employees and
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third parties to raise any concerns regarding activities related to Galapagos. The
reporting mechanism meets the requirements of the EU Whistleblowing directive and
enables anonymous reporting when allowable. Individuals who wish to report a concern
can choose from the local language that works best for them and can submit their report
anonymously. We believe that this helps our employees and third parties to feel heard
and also protected, while alerting Galapagos about any potential issues and enabling
early corrective action as needed. All matters are fully reviewed and investigated as
needed in accordance with our internal procedure which is managed by our Global Head
of Compliance & Ethics. This framework is overseen by a Speak Up, Listen Up Committee,
members of which are heads of Legal, HR, Internal Control and Compliance & Ethics, and,
in the event of serious or material matters, escalated to the Chair of the Audit Committee.
We also nurture a culture of integrity, with the aim that our employees, partners and
suppliers value and take accountability for upholding our standards.
We operate in an environment where the safety of patients is paramount. Until the
transfer of the Marketing Authorisation for Jyseleca® to Alfasigma, we are responsible
for
in Europe. We implemented a
pharmacovigilance system designed to monitor the safety of Jyseleca® and to detect any
change to the benefit/risk profile.
the marketing of one medicine, Jyseleca®,
Animal welfare
From a scientific perspective,
it is not yet possible to examine all the complex
interactions that a potential treatment triggers in a living organism without animal
testing. Additionally, the regulatory and legal framework for drug development requires
new medicines to be evaluated in animals to ensure the quality, safety, and efficacy of
these product candidates. We continue to implement the 3Rs (Replacement, Reduction,
and Refinement) principles as set out in our Animal Welfare Policy. Animal welfare is
reinforced through several key actions at the vendor level, including a surveillance
process of incidents and their remediation and a communication plan on preemptive
and reactive measures taken in animal studies.
Monitoring compliance of our vendors with Galapagos standards and animal welfare
guidelines is part of the Animal Welfare Community mission. Although Galapagos uses
vendors with state-of-the-art approaches, incidents might still happen occasionally. In
such instances, we actively support investigation of the root cause, propose effective
remediation solutions and diligently follow-up on any corrective actions. 100% of our
vendors adhere to our Animal Welfare Policy.
In 2023, we identified 3 incidents with regard to animal welfare, in our own organization
and also in one single vendor facility. We investigated the identified incidents and took
appropriate measures to remediate them. All incidents were adequately handled.
On-site visits will be conducted to verify the effectiveness of the implemented actions in
2024. Monitoring of the ongoing remediation actions is planned.
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Actions 2023
We launched our Speakup,ListenUpprogram in 2022, continued the roll out in 2023,
and we aim to make this integral to our routine new employee onboarding in 2024.
As encouraged by our Speak Up, Listen Up program, we received a number of reports
for potential non-compliance. One breach of our Code of Conduct was escalated
to the Audit Committee in 2023. Appropriate measures were taken to address this
breach.
We launched an anti-harassment and anti-discrimination policy in 2023, and
further communication and training on this topic is planned for 2024
94% of our employees completed our Code of Conduct training
Since late 2022, the Third-Party Risk Assessment (TPRA) process for the onboarding
of new vendors is mandatory, and going forward, we aim to use the TPRA as a KPI to
measure compliance and ethics in our supply chain
We executed an external screening of our 100 preferred suppliers. We are currently
checking different risks factors, including ESG indicators; and
The animal welfare remediation plan for addressing the identified gaps was
completed in 2023. We implemented more than 14 major 3R initiatives, and 100%
of our trusted suppliers adhere to our Animal Welfare Policy, reinforcing our
expectations when working with third parties. The communication and crisis
management plan were released, and the Animal Welfare webpage was created
for increasing employee’s awareness. Multiple and regular communication on the
3Rs principles, as well as a participation in a major international initiative, were
associated with a decrease in the number of animals used in 2023. Close follow-
up on animal welfare incidents, with issue management as a full part of the study
oversight, supported fast resolution of the incidents. All KPIs were met at the end of
the year, indicating that our ethical values were understood, internally and externally.
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Reporting
Reporting framework
We are preparing detailed reporting on our material aspects according to the Corporate
Sustainability Reporting Directive (CSRD) by setting up a dedicated reporting team,
evaluating policies and procedures, and defining scope, targets, metrics and action
plans as needed. Additionally, we are evaluating reporting systems to ensure a robust
data collection process. We expect to report in line with EU Sustainability Reporting
Standards (ESRS) for the 2024 fiscal year.
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 the Annual Report.
To standardize our 2023 data collection, we use the United Nations Sustainable
Development Goals (SDGs), also known as the Global Goals, as our reference framework
to link our 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.
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Advancing UN SDGs
In 2023, we signed up for the Ten Principles of the United Nations Global Compact in
the areas of Human Rights, Labour, Environment, and Anti-Corruption. In the annual
Communication on Progress, which can be found on Galapagos’ participation profile on
the UN Global Compact website, we disclose our continuous efforts to integrate the Ten
Principles into our business strategy, culture, and daily operations, and contribute to
United Nations goals, particularly the Sustainable Development Goals (SDG).
We 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 select components
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.
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ENABLING SDG
Quality education
We invest in our employees and foster an inclusive, open and
supportive work environment across our 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 are a global biotechnology company with operations in
Europe and the US.
Industry, innovation and infrastructure
innovation
Our mission is to accelerate transformational
through the relentless pursuit of groundbreaking science, our
entrepreneurial 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.
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Reporting on EU Taxonomy
EU Taxonomy 2023 statement
The European Commission’s action plan on financing sustainable growth led to the
creation of an EU classification system for sustainable activities, also known as the EU
taxonomy. As a listed company with more than 500 employees, Galapagos is in scope of
the EU Taxonomy Regulation16. As indicated in the Delegated Regulation of (EU) 2021/
2178, non-financial undertakings shall disclose the proportion of Taxonomy-eligible and
alignment of economic activities in their total turnover, capital expenditure (“CapEx”),
operational expenditure (“OpEx”) and the qualitative information starting from reporting
year 2022,
including comparative figures for eligibility related to climate change
mitigation and adaptation. Starting in reporting year 2023, the proportion of Taxonomy
eligibility shall be disclosed for all remaining objectives.
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: (i) climate change mitigation; (ii) climate change adaptation;
(iii) sustainable use and protection of water and marine resources; (iv) transition to
a circular economy, (v) pollution prevention and control; and (vi) protection and
restoration of biodiversity and ecosystems;
not significantly harming any of these environmental objectives;
complying with minimum safeguards; and
complying with certain scientifically based technical screening criteria (‘TSCs’)
established by the EU Commission.
The EU 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 of the
aforementioned overarching criteria, which includes that such activity should
substantially contribute to at least one of the six environmental objectives.
Following a thorough analysis of the EU Taxonomy legal framework17, which was initiated
by reviewing the company’s NACE codes in light of the EU Taxonomy identified activities, we
do not consider our core business activities of discovering, developing and commercializing
innovative medicines to be in scope of the Climate Delegated Act. Additionally, the newly
added EU Taxonomy activities were screened (such as manufacturing of medicinal products),
but not considered as within our control as Jyseleca® is manufactured by a third party.
16
17
Commission Delegated Regulation (EU) 2023/2485 of 27 June 2023 amending Delegated Regulation (EU) 2021/2139 establishing
additional technical screening criteria for determining the conditions under which certain economic activities qualify as contributing
substantially to climate change mitigation or climate change adaptation and for determining whether those activities cause no
significant harm to any of the other environmental objectives.
Commission Delegated Regulation (EU) 2023/2486 of 27 June 2023 supplementing Regulation (EU) 2020/852 of the European Parliament and of the
Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing
substantially to the sustainable use and protection of water and marine resources, to the transition to a circular economy, to pollution prevention
and control, or to the protection and restoration of biodiversity and ecosystems and for determining whether that economic activity causes no
significant harm to any of the other environmental objectives and amending Commission Delegated Regulation (EU) 2021/2178 as regards specific
public disclosures for those economic activities.
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Within the context of our ambition to become climate neutral by 2028, we screened the
related activities and identified the following activities included in the EU Taxonomy:
Acquisition and ownership of buildings
Consultancy for physical climate risk management and adaptation
Installation and operation of electric heat pumps
Transport by motorbike, passenger cars and light commercial vehicles
For the determination of turnover, CapEx and OpEx during this analysis, we use the
reported data in the 2023 consolidated financial statements included in this report:
Turnover covers all continuing activities of Galapagos as of 31 December 2023 and
the denominator can be reconciled with the 2023 IFRS total net revenues of €239.7
million as disclosed in note 7, being the revenues collaboration activities.
CapEx consists of additions to tangible and intangible assets during the financial
year 2023 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 “Additions” disclosed in notes 14 and 15
(total €20.8 million) of the consolidated financial statements. The majority of CapEx
is associated with software and databases, and property, plant and equipment
(covering fully-owned and leased).
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 8 (total €375.3 million).
Based on available data and the assessment of requirements, we report 0% Taxonomy
eligible Turnover, and therefore 0% Taxonomy aligned. As a result of our climate neutral
ambition by 2028 and the related investments we report 13.59% Taxonomy eligible
CapEx, with 2.77% Taxonomy aligned, and 0.06% Taxonomy eligible and aligned OpEx
(as presented in the tables in Appendix).
Please refer to the Appendix to this Annual Report for the disclosure on KPIs of non-
financial undertakings as required by Annexes II of the Climate Delegated Act.
The limited “eligibility” under the EU Taxonomy refers to the fact that our core activities
currently remain outside of the scope of the economic activities for which TSCs have
been developed under the Delegated Regulations.
We note that the required disclosures under the EU Taxonomy Regulation will keep evolving
and that we will continue to consider its impact as well as future reporting obligations.
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Appendix
Energy Consumption and Mix
Fuel consumption from coal and coal products
Fuel consumption from crude oil and petroleum products(*)
Fuel consumption from natural gas
Fuel consumption from other fossil sources
Consumption of purchased or acquired electricity, heat, steam, and cooling from
fossil sources
Total fossil energy consumption
Share of fossil sources in total energy consumption
Consumption from nuclear products
Share of consumption from nuclear sources in total energy consumption
Fuel consumption from renewable sources, including biomass (also comprising
industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.)
Consumption of purchased or acquired electricity, heat, steam, and cooling from
renewable sources
The consumption of self-generated non-fuel renewable energy
Total renewable energy consumption
Share of renewable sources in total energy consumption
Total energy consumption
MWh
MWh
MWh
MWh
MWh
MWh
%
MWh
%
MWh
MWh
MWh
MWh
%
MWh
2022
(base year)
0
10,756
3,444
0
1,260
15,460
82
0
0
0
3,352
0
3,352
18
2023
0
10,362
2,948
0
694
14,004
75
0
0
0
4,683
0
4,683
25
18,812
18,687
(*) Includes the energy consumed in Galapagos’ buildings, by stationary diesel consumption (used by back-up generators and by Galapagos’ car fleet). The latter is based on estimated
distance travelled and estimated fuel consumption.
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Greenhouse Gas Emissions
Scope 1 GHG Emissions
Gross Scope 1 GHG emissions
Percentage of Scope 1 GHG emissions from regulated ETS
Scope 2 GHG Emissions
Gross location-based Scope 2 GHG emissions
Gross market-based Scope 2 GHG emissions
Significant Scope 3 GHG Emissions
Total Gross indirect (Scope 3) GHG emissions
Purchased goods and services(**)
Capital Goods(**)
Fuel and energy-related activities(*)
Upstream leased assets(*)
Waste generated in operations(**)
Processing of sold products
Use of sold products
End-of-life treatment of sold products(**)
Downstream leased assets
Franchises
Upstream transportation and distribution(*)
Downstream transportation and distribution(*)
Business travels(*)
Employee commuting(**)
Financial investments
Total GHG emissions
Total GHG emissions (location-based)
Total GHG emissions (market-based)
(*) actual data
(**) estimated
2022
(base year)
3,180
0
849
217
54,609
42,586
8,456
790
6
50
N/A
N/A
11
N/A
N/A
95
5
1,058
1,552
N/A
58,638
58,006
TCO2e
%
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
TCO2e
2023
2,922
0
1,132
173
36,537
28,257
4,534
791
6
36
N/A
N/A
18
N/A
N/A
109
11
1,480
1,295
N/A
40,591
39,632
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EU Taxonomy
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities
– disclosure covering year 2023
Substantial contribution criteria
DNSH criteria ('Does Not
Significantly Harm')
2
0
2
3
:
P
r
o
p
o
r
t
i
o
n
o
f
T
u
r
n
o
v
e
r
(
4
)
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
)
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
)
C
i
r
c
u
l
a
r
E
c
o
n
o
m
y
(
1
5
)
i
B
o
d
i
v
e
r
s
i
t
y
(
1
6
)
P
o
l
l
u
t
i
o
n
(
1
4
)
W
a
t
e
r
(
1
3
)
C
i
r
c
u
l
a
r
E
c
o
n
o
m
y
(
9
)
i
B
o
d
i
v
e
r
s
i
t
y
(
1
0
)
P
o
l
l
u
t
i
o
n
(
8
)
W
a
t
e
r
(
7
)
Economic activities (1)
T
u
r
n
o
v
e
r
(
3
)
C
o
d
e
(
2
)
Proportion
of
Taxonomy-
aligned
(A.1.)
or -eligible
(A.2.)
turnover,
year
2022(*)
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
i
i
M
n
m
u
m
S
a
f
e
g
u
a
r
d
s
(
1
7
)
€, in
thousands
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
%
Y/N Y/N Y/N Y/N Y/N Y/N Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Turnover of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
Of which enabling
Of which transitional
0
0
0
0%
0%
0%
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Turnover of Taxonomy-eligible
but not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2)
A. Turnover of Taxonomy-
eligible activities (A.1+A.2)
0
0
0%
0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-non-
eligible activities
239,724 100%
TOTAL
239,724 100 %
Y: yes; N: no; N/EL: (non-)eligible
(*) The 2022 comparatives have been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
0%
0%
0%
0%
0%
100%
100%
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Proportion of Turnover/Total Turnover
Taxonomy aligned
per objective
Taxonomy-
eligible
per objective
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity (10)
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Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities –
disclosure covering year 2023
Substantial contribution criteria
DNSH criteria ('Does Not
Significantly Harm')
2
0
2
3
:
P
r
o
p
o
r
t
i
o
n
o
f
C
a
p
E
x
(
4
)
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
)
C
i
r
c
u
l
a
r
E
c
o
n
o
m
y
(
9
)
i
B
o
d
i
v
e
r
s
i
t
y
(
1
0
)
P
o
l
l
u
t
i
o
n
(
8
)
W
a
t
e
r
(
7
)
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
)
C
i
r
c
u
l
a
r
E
c
o
n
o
m
y
(
1
5
)
i
B
o
d
i
v
e
r
s
i
t
y
(
1
6
)
P
o
l
l
u
t
i
o
n
(
1
4
)
W
a
t
e
r
(
1
3
)
Economic activities (1)
C
o
d
e
(
2
)
C
a
p
E
x
(
3
)
Proportion
of
Taxonomy-
aligned
(A.1.)
or eligible
(A.2.)
CapEx,
year 2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
i
i
M
n
m
u
m
S
a
f
e
g
u
a
r
d
s
(
1
7
)
T
T
T
€, in
thousands
Y; N; N/
EL
%
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y/N Y/N Y/N Y/N Y/N Y/N Y/N
%
E
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Transport by motorbikes,
passenger cars and light
commercial vehicles
CapEx of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
Of which enabling
Of which transitional
6.5
577 2.77%
Y
577 2.77% 2.77%
0
0%
0%
577 100% 100%
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Acquisition and ownership of
buildings
Transport by motorbikes,
passenger cars and light
commercial vehicles
CapEx of Taxonomy-eligible
but not environmentally
sustainable activities (not
Taxonomy-aligned
activities) (A.2)
A. CapEx of Taxonomy-
eligible activities (A.1+A.2)
7.7
1,100 5.28%
6.5
1,155 5.54%
Y
Y
2,255 10.82% 10.82%
2,832 13.59% 13.59%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-
eligible activities
Total (A + B)
Y: yes; N: no; N/EL: (non-)eligible
18,008 86.41%
20,840 100%
E
%
0.59%
7.18%
1.57%
8.75%
9.34%
90.66%
100%
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Proportion of CapEx/Total CapEx
Taxonomy aligned
per objective
Taxonomy-
eligible
per objective
2.77%
13.59%
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity (10)
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Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities –
disclosure covering year 2023
2
0
2
3
:
P
r
o
p
o
r
t
i
o
n
o
f
O
p
E
x
(
4
)
%
C
o
d
e
(
2
)
O
p
E
x
(
3
)
€, in
thousands
Economic activities (1)
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
)
C
i
r
c
u
l
a
r
E
c
o
n
o
m
y
(
9
)
i
B
o
d
i
v
e
r
s
i
t
y
(
1
0
)
P
o
l
l
u
t
i
o
n
(
8
)
W
a
t
e
r
(
7
)
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
)
C
i
r
c
u
l
a
r
E
c
o
n
o
m
y
(
1
5
)
i
B
o
d
i
v
e
r
s
i
t
y
(
1
6
)
P
o
l
l
u
t
i
o
n
(
1
4
)
W
a
t
e
r
(
1
3
)
Proportion
of
Taxonomy-
aligned
(A.1.)
or -eligible
(A.2.)
OpEx,
year
2022(*)
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
i
i
M
n
m
u
m
S
a
f
e
g
u
a
r
d
s
(
1
7
)
Y; N; N/
EL
Y; N; N/
EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL
Y; N;
N/EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N
%
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Installation and operation of
electric heat pumps
4.16
134 0.036%
Y
Consultancy for physical
climate risk management
and adaptation
OpEx of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
Of which enabling
Of which transitional
8.2
74 0.020%
Y
208 0.06% 0.036% 0.020%
208 100% 64% 36%
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
Y
0
Y
0.005%
0.005%
0.005%
Y
Y
Y
E
E
E
T
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)
A. OpEx of Taxonomy
eligible activities (A.1+A.2)
0 0.00%
208 0.06%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-
eligible activities
TOTAL
Y: yes; N: no; N/EL: (non-)eligible
375,022 99.94%
375,230 100%
(*) The 2022 comparatives have been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
0.00%
0.005%
99.995%
100%
110
Galapagos NV Annual Report 2023
SUSTAINABILITY REPORT
Proportion of OpEx/Total OpEx
Taxonomy aligned
per objective
Taxonomy-
eligible
per objective
0.036%
0.020%
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular Economy (9)
Biodiversity (10)
111
Galapagos NV Annual Report 2023
SUSTAINABILITY REPORT
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
112
Galapagos NV Annual Report 2023
Corporate
governance
Our governance in 2023
Pioneering science to
transform patient outcomes
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 and as amended from time to time.
For the reporting year beginning on 1 January 2023, the 2020 Code was our reference
code. On 21 March 2023, as a consequence of the establishment of the Management
Committee, i.e., an informal committee providing advice and assistance to the Executive
Committee, the Board of Directors approved an amendment to the Company’s
Corporate Governance Charter. On 19 September 2023, the Board of Directors approved
another amendment that refers to the establishment of the Science and Development
Committee as a specialized Board Committee to provide advice on certain matters to the
Board of Directors, and that provides that non-executive Directors may only be natural
persons. On 11 December 2023, the Board of Directors approved a further amendment
to describe the responsibilities of the Audit Committee and management for overseeing
and managing cybersecurity risks. Galapagos NV’s Corporate Governance Charter is
available on our website (www.glpg.com). This Corporate Governance Charter applies
in addition to the applicable laws and regulations (including, without limitation, the
Belgian Companies Code and the 2020 Code) and Galapagos NV’s Articles of Association.
The Company’s Corporate Governance Charter describes the main aspects of corporate
governance at Galapagos NV,
including its governance structure, the terms and
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 2023, 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.
114
Galapagos NV Annual Report 2023
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.
Since 26 April 2022, Galapagos NV has adopted a one-tier governance structure as
provided by the Belgian Companies Code, with the Board of Directors as the ultimate
decision-making body, who has delegated certain powers to manage the Company to
the Executive Committee.
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
The role of the Board of Directors is to pursue a 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 also supervises the Executive
Committee. The Board acts as a collegiate body.
115
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
The Board of Directors has delegated certain powers to manage the Company to the
Executive Committee, led by the Chief Executive Officer (the “CEO”). 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 CEO.
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,
a Nomination Committee, and a Scientific and Development 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.
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. These Risk management and Risk
factors sections are deemed fully incorporated by simple reference into this corporate
governance statement.
116
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Board of Directors of Galapagos NV
Composition of the Board of Directors
Per 31 December 2023, 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
117
Galapagos NV Annual Report 2023
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.
118
Galapagos NV Annual Report 2023
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 and Georgetown University.
Mr. O’Day holds a Bachelor’s Degree in Biology from Georgetown
University and a MBA from Columbia University in New York.
*On 26 March 2024, Mr. O’Day resigned as member of Galapagos’
Board of Directors. He was replaced by Gilead’s CFO, Mr. Andrew
Dickinson, as communicated in the press release of 26 March 2024
119
Galapagos NV Annual Report 2023
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.
120
Galapagos NV Annual Report 2023
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. Dr. Svanberg subsequently served as Chief
Development Officer at Ixaltis, and as Chief Medical Officer at Kuste
Biopharma, specialty pharmaceutical companies developing
proprietary therapeutics to treat genitourinary (GU) disorders with
unmet medical need. Dr. Svanberg is a partner at Ventac Partners
(since 2023) and also serves as a Non-Executive Director on the
Boards of Egetis (formerly PledPharma) (since 2017), Amolyt
Pharma (since 2021), LEO Pharma (since 2022), and EPICS
Therapeutics (since 2022).
121
Galapagos NV Annual Report 2023
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 and at
Total Energies from 2020 to 2023. Mr. Contamine also serves as a
non-executive director on the Boards of Société Générale.
122
Galapagos NV Annual Report 2023
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 U.S.,
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.
123
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Susanne Schaffert
is a non-executive independent
member of our Board of Directors
since 12 June 2023, and is the
former Global President, Novartis
Oncology, and a member of the
Executive Committee of Novartis.
For more than 25 years, Dr.
Schaffert has dedicated her career
at Novartis to helping patients live
longer, better lives. Before
assuming her role as President of
Novartis Oncology, Dr. Schaffert
served as Chairperson and
President of Advanced Accelerator
Applications since its acquisition by Novartis in January 2018. Prior
to this, Dr. Schaffert was the Head of Region Europe at Novartis
Oncology, where she was responsible for leading Novartis’
Oncology Business Unit in the European Region, marketing key
products in lung, breast and renal cancer, as well as hematology
and coordinating the entire Oncology operations for EU countries.
From 2010 to 2012, Dr. Schaffert served as the Head of Investor
Relations for Novartis Group and prior thereto, she served as the
Novartis Global Franchise Head for Immunology and Infectious
Diseases. Dr. Schaffert first joined Novartis Germany in 1995 as a
sales representative, and she has held a series of positions in Sales
& Marketing with increasing responsibilities in both national and
global functions. Dr. Schaffert has experience from various Boards
and Committees, and beyond serving Galapagos NV as non-
executive independent Board member, she is also an independent
non-executive Director on the Board of Incyte Corporation, a Board
member and member of the Advisory Group at Novo Holdings in
Denmark and serves as independent Board Director on the boards
of ARTBio, US and Vetter Pharma, Germany. She is also a member of
the Board of Partners of E. Merck KG. Dr. Schaffert holds an M.Sc. in
Chemistry and a Ph.D. with honors in Organic Chemistry from
University of Erlangen (Germany).
124
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Simon Sturge
is a non-executive independent
member of our Board of Directors
since 19 September 2023, and was
the former CEO of Kymab, a biotech
company focused on immune-
mediated diseases and immuno-
oncology therapeutics, until its
acquisition by Sanofi in 2021. Mr.
Sturge brings over 40 years of global
experience in the pharmaceutical
industry, including manufacturing
expertise from decades of
leadership roles at Celltech
Biologics (now Lonza), Boehringer
Ingelheim and Merck KGgA. He is currently chairing three
biotechnology companies in Switzerland, Belgium, and the United
States. He also runs his family investment fund and consultancy
company and is a Trustee of Weizmann UK. Mr. Sturge joined Kymab
as CEO in 2019 before selling it to Sanofi two years later. Before
Kymab, he spent six years at Merck Group, based at their corporate
headquarters in Darmstadt, Germany, as Executive Vice President
Global Strategy, Business Development & Global Operations and
previously as Chief Operating Officer of Merck Healthcare,
responsible for the company’s global commercial and
manufacturing operations. In this capacity, he was responsible for
the continued growth in global sales at Merck KGaA, as well as the
commercial launches of Bavencio® (anti-PD-L1 antibody, avelumab)
in solid tumors and Mavenclad® (cladribine) for relapsing multiple
sclerosis. Prior to that, Mr. Sturge served as Corporate Senior Vice
President, Biopharmaceuticals at Boehringer Ingelheim, where he
was responsible for the company’s global biopharmaceuticals
manufacturing business as well as its biosimilars portfolio. Mr.
Sturge was also founder and CEO of Ribotargets (now Vernalis),
which was acquired by British Biotech. Mr. Sturge holds a BSc
degree in Biology from Sussex University.
125
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Changes to our Board of Directors
The tenure of Dr. Rajesh Parekh and Dr. Mary Kerr as members of our Board of Directors
came to an end during the financial year ended on 31 December 2023. We thank
Dr. Rajesh Parekh and Dr. Mary Kerr for their contributions and commitment to the
Company over the years.
During its meeting of 12 June 2023, the Board of Directors appointed Dr. Susanne
Schaffert by cooptation as a non-executive independent Director, replacing Dr. Rajesh
Parekh who stepped down on 10 June 2023.
During its meeting of 19 September 2023, the Board of Directors appointed Mr. Simon
Sturge by cooptation as a non-executive independent Director, replacing Dr. Mary Kerr
who stepped down on 18 September 2023.
Dr. Susanne Schaffert’s and Mr. Simon Sturge’s appointments will be submitted to the
confirmation by the Company’s Annual Shareholders’ Meeting which will be held on
30 April 2024.
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 2023, the Board of Directors consisted of nine members, six of whom are
independent within the meaning of article 7:87 of the Belgian Companies Code and
provision 3.5 of the 2020 Code. In 2023, the Board of Directors was therefore composed
of a majority of independent Directors.
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
appointment originating from shareholders,
in each case taking into account the
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
126
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
presiding over the Board of Directors (the Chair) and the person assuming executive
responsibility for running the company’s business (the CEO), and (b) the Chair 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, is also appointed as Chair of the Board of Directors as of 26 April
2022. In light of the prevailing circumstances, the Board of Directors considered (and
to date still considers) that the one-tier governance structure and the combined role as
CEO/Chair 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 on the provision of information to the Board of Directors, allowing
the Board of Directors to monitor the Company’s (and Galapagos group’s) performance
more effectively during 2023. In order to ensure a sufficient balance, the Board adopted
a counter balancing governance structure that includes the election of a Lead Non-
Executive Director acting as the principal liaison between the Chair and the non-
executive members of the Board of Directors (see also below). Effective as of 21 March
2023, Jérôme Contamine is appointed as Lead Non-Executive Director of the Company.
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 2023:
Name
Stoffels IMC BV(2)
Rajesh Parekh(3)
Mary Kerr(4)
Position
Nationality
Chair
Belgian
Member
British
Member
British
Peter Guenter
Member
Belgian
Elisabeth Svanberg
Member
Swedish
Jérôme Contamine
Member
French
Dan Baker
Susanne Schaffert(5)
Simon Sturge(6)
Daniel O’ Day
Linda Higgins
Member
U.S.
Member
German
Member
British
Member
Member
U.S.
U.S.
Year of birth
or
incorporation
Year of
initial
appoint-
ment
Year of
mandate
expiration
Independent
director(1)
Attendance
rate
2022
1960
1961
1962
1961
1957
1950
1967
1959
1964
1962
2022
2004
2016
2019
2020
2022
2022
2023
2023
2019
2019
2026
2023
2023
2027
2024
2026
2026
2027
2027
2027
2027
●
●
●
●
●
●
●
100%
100%
100%
100%
100%
100%
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) Permanently represented by Dr. Paul Stoffels, year of birth: 1962.
(3) Director until 10 June 2023.
(4) Director until 18 September 2023.
(5) Director since 12 June 2023.
(6) Director as from 19 September 2023.
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At the Annual Shareholders’ Meeting of 25 April 2023, the tenure of Peter Guenter, Daniel
O’Day and Dr. Linda Higgins as members of the Board of Directors has been renewed for
a term of four years.
In 2023, the Board of Directors thus consisted of three women (except between 12 June
2023 and 18 September 2023 when the Board consisted of four women), and six men
(except between 12 June 2023 and 18 September 2023 when the Board consisted of five
men), representing different nationalities and age categories.
During 2023, 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
6
independent
Status:
9
members
3
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 under the applicable laws and regulations
(including, without limitation, the Belgian Companies Code and the 2020 Code) and
the Company’s Articles of Association, 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 2023, the Board of Directors dealt with matters
pertaining to, among other things, our strategy and growth, the transfer of Galapagos
drug discovery and research activities conducted in Romainville, France, and Galapagos’
employees in Romainville, which are exclusively dedicated to the operation of these
activities, to NovAliX, the evaluation of business development opportunities, clinical
trial results, commercialization of Jyseleca®, 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, the search and recruitment of our new CFO and
COO and new Board members, the review and approval of our financial reporting,
updating Galapagos' Corporate Governance Charter and creating a new advisory
committee, the Science and Development Committee, adopting a Clawback Policy in
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accordance with applicable SEC rules, and the transfer of the Jyseleca® business to
Alfasigma.
In 2023, twelve meetings of the Board of Directors took place physically or through calls
to discuss specific matters, including one meeting in the presence of a notary public
(relating to the issuance of Subscription Right Plan 2023 BE, Subscription Right Plan 2023
RMV and Subscription Right Plan 2023 ROW). The meeting in the presence of a notary
public was attended by Peter Guenter and Dr. Elisabeth Svanberg via call. Stoffels IMC
BV (permanently represented by Dr. Paul Stoffels) was not present or represented at the
Board meeting in the presence of a notary public. All other Directors were represented
by proxy at the Board meeting in the presence of a notary public. The attendance rate
for the other Board meetings is identified in the above table. Except for the meeting
in the presence of a notary public, the overall attendance rate for Board meetings was
100%. Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) recused itself from
deliberation and decision-making on three agenda items 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. Board member profiles were established, which served the Board in the search
for Director candidates to fill open positions by cooptation.
Pursuant to the Company’s Corporate Governance Charter and as a counter balancing
governance structure for the current combined CEO & Chair role within the Board, the
Board of Directors has appointed a Lead Non-Executive Director. The Lead Non-
Executive Director is also automatically the Vice-Chair 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 Chair of the Board.
Effective as of March 21, 2023, Jérôme Contamine was appointed as the Lead Non-
Executive Director of Galapagos NV.
The Board of Directors has 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.
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Committees
Audit Committee
Audit Committee member
Jérôme Contamine
Mary Kerr(2)
Peter Guenter
Simon Sturge(3)
Function
Chair
Member
Member
Member
Independent
member(1)
Attendance rate
●
●
●
●
100%
100%
100%
100%
(1) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code.
(2) Member until 18 September 2023.
(3) Member as from 19 September 2023.
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)
monitoring the internal audit function and its effectiveness,
(iv) monitoring the
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 2023, the Audit Committee consisted of the Directors as identified in
the table above. The Chair and other 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). 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.
The Audit Committee meets as frequently as necessary to ensure effective operation
of its responsibilities. In 2023, the Audit Committee held nine meetings, in which it
dealt with matters pertaining to, among other things, audit review, risk management,
monitoring financial reporting, the monitoring of Sarbanes-Oxley compliant internal and
external audit systems, the monitoring of compliance matters, the onboarding of the
new auditor, and (the accounting treatment of) the intended transfer of the Jyseleca®
business to Alfasigma. The Audit Committee acts as a collegial body. The overall
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attendance at the Audit Committee meetings in 2023 was 100%. The attendance rate at
the Audit Committee meetings in 2023 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
Rajesh Parekh(2)
Stoffels IMC BV(3)
Jérôme Contamine
Elisabeth Svanberg(4)
Function
Member
Member
Member
Chair
Independent
member(1)
Attendance rate
100%
100%
100%
100%
●
●
(1) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code.
(2) Chair and member until 20 March 2023.
(3) Permanently represented by Dr. Paul Stoffels.
(4) Chair and member as of 21 March 2023.
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 2023, the Nomination
Committee consisted of the Directors as identified in the table above. The majority of
its members are non-executive independent Directors. The Chair of the Nomination
Committee is a non-executive independent Director. 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 until 20 March 2023 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 Chair of the Nomination Committee in view of his
experience as former Chair of the Board and to ensure a smooth transition to the new
Chair. Effective as of 21 March 2023, Dr. Elisabeth Svanberg was appointed as member
and Chair of the Nomination Committee, replacing Dr. Rajesh Parekh.
its responsibilities.
The Nomination Committee meets as frequently as necessary to ensure effective
In 2023, the Nomination Committee held seven
operation of
meetings, dealing with, among other things, matters pertaining to the search for new
Directors and Executive Officers, the proposal to reappoint certain Directors at our
Shareholders’ Meeting on 25 April 2023, and succession planning. The Nomination
Committee acts as a collegial body. The overall attendance at the Nomination
Committee meetings in 2023 was 100%. The attendance rate at the Nomination
Committee meetings in 2023 for each of its members is set forth in the table above.
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Remuneration Committee
Remuneration Committee members
Rajesh Parekh(2)
Jérôme Contamine
Elisabeth Svanberg(3)
Dan Baker(4)
Function
Chair
Member
Chair
Member
Independent
member(1)
Attendance rate
●
●
●
100%
100%
100%
100%
(1) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code.
(2) Chair and member until 20 March 2023.
(3) Chair as of 21 March 2023.
(4) Member as of 21 March 2023.
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 2023, the Remuneration Committee consisted of the Directors as
identified in the table above. The Chair and other members of the Remuneration
Committee are non-executive Directors and are all independent 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.
its responsibilities.
The Remuneration Committee meets as frequently as necessary to ensure effective
In 2023, the Remuneration Committee held ten
operation of
meetings, dealing with, among other things, matters pertaining to the remuneration of
our new Executive Committee member, grants of subscriptions rights, restricted stock
units (RSUs) and bonuses, the packages of our retiring President, Chief Operating Officer
the
and Chief Financial Officer, and Chief Commercial Officer,
Remuneration Policy and Remuneration Report, and salary increases. The Remuneration
Committee acts as a collegial body. The overall attendance at the Remuneration
Committee meetings in 2023 was 100%. The attendance rate at the Remuneration
Committee meetings in 2023 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) was discussed.
the review of
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Science and Development Committee
Remuneration Committee members
Dan Baker(2)
Stoffels IMC BV(3)
Elisabeth Svanberg
Linda Higgins
Susanne Schaffert
Function
Chair
Member
Member
Member
Member
Independent
member(1)
Attendance rate
●
●
●
●
100%
100%
100%
100%
100%
(1) The Science and Development Committee was established as from 19 September 2023.
(2) Independent member pursuant to article 7:87 of the Belgian Companies Code and article 3.5 of the 2020 Code.
(3) Permanently represented by Dr. Paul Stoffels.
The Science and Development Committee provides input and advice to the Board of
Directors on matters relating to the Company’s Research and Development (“R&D”)
strategy, and serves as a resource, as needed, regarding scientific, medical, and product
safety matters.
Per 31 December 2023, the Science and Development Committee consisted of the
Directors as identified in the table above. The majority of its members are non-executive
independent Directors. The Chair of the Science and Development Committee is a non-
executive independent Director. Collectively, the Science and Development Committee
members have sufficient relevant experience to fulfill their roles effectively.
The Science and Development Committee meets as frequently as necessary to ensure
effective operation of its responsibilities. In 2023, the Committee held one meeting,
dealing with, among other things, the review of business development opportunities.
The Science and Development Committee acts as a collegial body. The overall
attendance at the Science and Development Committee meeting in 2023 was 100%.
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Executive Committee of Galapagos NV
Composition of the Executive Committee
Per 31 December 2023, our Executive Committee consists of the following members:
Stoffels IMC BV, permanently represented by Dr. Paul Stoffels – Please refer to the
Composition of the Board of Directors for a biography.
Thad Huston
was appointed as Chief Financial
Officer and Chief Operating Officer
as per July 2023, and is a member
of the Executive Committee at
Galapagos. He previously served a
Senior Vice President, Finance and
Corporate Operations of Kite
Pharma, a Gilead Company, where
he was responsible for all financial
aspects of the market leading cell
therapy business worldwide. He
was also a member of the Kite
Leadership Team, the Gilead CFO
Leadership Teams and the Fosun-
Kite Board. Before joining Kite in 2021, Thad served as Chief
Financial Officer at LivaNova PLC, a medical device company
specializing in cardiovascular and neuromodulation products,
where he played a key role in external R&D innovation and M&A and
led the global, cross-functional teams across the group. Prior to
LivaNova, he spent over 25 years in leadership positions at Johnson
& Johnson (J&J), which included roles as Chief Financial Officer and
Chief Operating Officer of J&J Pharmaceutical Research and
Development, Chief Financial Officer of J&J’s Global Surgery and
Medical Devices groups managing up to $21 billion in annual
revenue, and President of Xian-Janssen, leading J&J’s
pharmaceutical division in China. Before that, he held senior
financial roles at various J&J locations in the U.S., Belgium, Russia,
and Hungary. Thad is passionate about delivering results by
transforming businesses to accelerate internal and external
innovation to make a real difference for patients around the world.
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Michele Manto*
was 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.
*On 31 December 2023, the mandate of Mr. Manto as Chief
Commercial Offier and member of the Executive Committee ended.
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Annelies Missotten
was 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).
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Valeria Cnossen
was 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.
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About the Executive Committee
The following table sets forth certain information with respect to the members of our
Executive Committee during the financial year ending 31 December 2023:
Name
Stoffels IMC BV(1)
Bart Filius(2)
Thad Huston(3)
Michele Manto(4)
Valeria Cnossen
Position
Nationality
Year of birth
or incorporation
Year of initial
appointment
Chief Executive Officer
Belgian
2022
President, Chief Financial Officer
& Chief Operating Officer
Chief Financial Officer and Chief
Operating Officer
Chief Commercial Officer
General Counsel
Dutch
U.S.
Italian
Dutch
2022
2014
2023
2020
2023
2023
1970
1970
1973
1973
1972
Annelies Missotten
Chief Human Resources Officer
Belgian
(1) Permanently represented by Dr. Paul Stoffels.
(2) Member until 30 June 2023.
(3) Member as from 1 July 2023.
(4) Member until 31 December 2023.
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 key responsibilities of the Executive Committee include the
following matters (without limitation): the research, identification and development of
strategic 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 Executive Committee meets as often as necessary to ensure its effective operation,
and in principle once per month.
The Executive Committee is supported by a Management Committee, i.e., an informal
committee providing advice and assistance to the Executive Committee. The
Management Committee consists of the Executive Committee members and certain
members of the Company’s senior management thereto appointed by the Executive
Committee. With the exception of the Executive Committee members, the members of
the Management Committee are not Directors or person charged with the leadership or
daily management of the Company as defined by Belgian law.
On 31 December 2023, the Executive Committee consisted of the members as identified
in the table above, representing different nationalities and age categories. Furthermore,
the Executive Committee members have different educational backgrounds, as can be
read in each of their profiles (see above).
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Bart Filius’ mandate as President, CFO, COO and Executive Committee member ended
per 30 June 2023. Michele Manto’s mandate as CCO and Executive Committee member
ended per 31 December 2023.
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.
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Galapagos NV’s share capital and shares
Share capital increases and issue of shares by
Galapagos NV in 2023
On 1 January 2023, the share capital of Galapagos NV amounted to €356,111,899.01
represented by 65,835,511 shares. In the course of 2023, there was one capital increase
resulting from the exercise of subscription rights under subscription right plans, resulting
in the issuance of 61,560 new shares, an increase of the share capital by €333,039.60 and
an increase of the issuance premium account by €1,436,810.40.
At the end of 2023, the share capital of Galapagos NV amounted to €356,444,938.61
represented by 65,897,071 shares.
During 2023, the Board of Directors issued subscription rights under three subscription
right plans:
On 5 May 2023, the Board of Directors issued 1,538,400 subscription rights, after
acceptance by the beneficiaries, within the framework of the authorized capital,
for the benefit of Executive Committee members and certain employees of the
Galapagos group under new subscription right plans: “Subscription Right Plan 2023
BE”, “Subscription Right Plan 2023 RMV” and “Subscription Right Plan 2023 ROW”.
The subscription rights issued under Subscription Right Plan 2023 BE, Subscription
Right Plan 2023 RMV and Subscription Right Plan 2023 ROW have an exercise term
of eight years as of the date of the offer, and subscription rights issued under the
first offer have an exercise price of €35.11 (the average closing price of the Galapagos
share on Euronext Amsterdam and Brussels during the 30 calendar days preceding
the date of the first offer), under the subsequent offer of €38.58 (the closing price
of the share on Euronext Amsterdam and Brussels during the 30 calendar days
preceding the date of the second offer), and under the second subsequent offer of
€32.99 (the closing price of the share on Euronext Amsterdam and Brussels during
the 30 calendar days preceding the date of the third offer).
Number and form of Galapagos shares
Of the 65,897,071 shares of Galapagos NV outstanding at the end of 2023, 5,846 were
registered shares and 65,891,225 shares were dematerialized shares. All issued shares
are 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 of
Galapagos NV; (ii) represents an identical fraction of the Company’s share capital and has
the same rights and obligations and shares equally in the profit of Galapagos NV; and (iii)
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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, within the framework of the
Company’s authorized capital, 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 provisions of the Belgian Companies Code and the Company’s
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 in extenso in the Articles of
Association of Galapagos NV.
This authorization consists of two parts:
A general authorization for capital increases up to 20% of the share capital at the
time of convening the Shareholders’ Meeting of 22 October 2019 (i.e., €67,022,402.04)
was renewed and is valid for a period of five years from the date of publication of
this renewal in the Annexes to the Belgian State Gazette, i.e., 13 November 2019. This
general authorization will expire on 12 November 2024; and
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 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 and provision 3.5 of the 2020 Code) approve. This specific authorization expired
on 30 May 2022.
In 2023, Galapagos NV’s Board of Directors made use of the right to increase the capital
in the framework of the authorized capital on one occasion:
On 5 May 2023, in connection with the issuance of Subscription Right Plan 2023 BE,
Subscription Right Plan 2023 RMV and Subscription Right Plan 2023 ROW, under
which a maximum of 1,975,000 new shares could be issued for a total maximum
capital increase of €10,684,750 (plus issuance premium).
On 31 December 2023, an amount of €16,566,540.17 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
if in Galapagos NV’s interest, restrict or cancel the shareholders’
of Directors may,
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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 (and issue
new shares) or decrease its share capital by decision of the Extraordinary Shareholders’
Meeting approved by a qualified majority of 75% of the votes cast, at a meeting where
at least 50% of the share capital of Galapagos NV is present or represented. If the
attendance quorum of 50% is not met, a new Extraordinary Shareholders’ Meeting must
be convened at which the shareholders may decide on the agenda items, irrespective of
the percentage of share capital present or represented at such meeting. In this respect,
there are no conditions imposed by Galapagos NV’s Articles of Association that are more
stringent than those required by law.
Within the framework of the powers granted to it under the authorized capital, the Board
of Directors may also increase Galapagos NV’s share capital (and issue new shares) as
specified in its Articles of Association.
Purchase and sale of Galapagos NV treasury shares
In accordance with the Belgian Companies Code and the Articles of Association of the
Company, Galapagos NV may purchase, subject to the provisions of the Belgian
Companies Code, Galapagos NV’s own shares if authorized by a prior decision of the
Extraordinary Shareholders’ Meeting approved by a qualified 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 sale of Galapagos NV treasury shares is also subject to the provisions
of the Belgian Companies Code. The aforementioned rules are also applicable to the
acquisition of shares of Galapagos NV by its subsidiaries.
The Board of Directors of Galapagos NV has currently not been authorized by an
Extraordinary Shareholders’ Meeting to purchase or sell its own shares.
On 31 December 2023, 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.
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Anti-takeover provisions under Belgian law
Under Belgian law, public takeover bids for all outstanding voting securities of the issuer
are subject to the supervision of the FSMA. If the latter determines that a takeover
violates Belgian law, it may lead to suspension of the exercise of the rights attached to
any shares that were acquired in connection with the envisaged takeover. Pursuant to
the Belgian Law of 1 April 2007 on public takeovers, a mandatory takeover bid must be
made when, as a result of its own acquisition or the acquisition by persons acting in
concert with it, a person owns, directly or indirectly, more than 30% of the securities
with voting rights in a company with registered office in Belgium whose securities are
admitted to trading on a regulated or recognized market. The acquirer must offer to all
other shareholders the opportunity to sell their shares at the higher of (i) the highest
price offered by the acquirer for shares of the issuer during the 12 months preceding
the announcement of the bid or (ii) the weighted average price of the shares on the
most liquid market of the last 30 calendar days prior to the date on which it became
mandatory for the acquirer to launch a mandatory takeover bid for the shares of all other
shareholders.
Material contracts containing change of control
clauses
The second amended and restated collaboration agreement between Galapagos NV
and AbbVie S.à.r.l. (“AbbVie”) dated 24 October 2018 contains provisions granting certain
rights to AbbVie upon the occurrence of a public takeover bid on our shares or a change
of control in respect of Galapagos NV, including, but not limited to clause 11.2 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, amendments to the Articles of Association
of Galapagos NV, such as an increase or decrease in the share capital, the approval of
the dissolution, merger or de-merger of Galapagos NV, but excluding an amendment
of the Company’s purpose, may only be authorized with the approval of at least 75%
(or, in case of an amendment of the Company’s purpose, 80%) 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.
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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 2023 and on an undiluted basis were Gilead
Therapeutics A1 Unlimited Company (16,707,477 shares or 25.35%), Van Herk
Investments B.V. (4,635,672 shares or 7.03%), EcoR1 Capital LLC (6,505,890 shares or
9.87%) and FMR LLC (3,903,804 shares or 5.92%).
Major shareholders on 31 December 2023
51.80%
Other shareholders
25.35%
Gilead
7.03%
Van Herk Investments
9.87%
EcoR1 Capital
0.02%
Insiders
5.92%
FMR LLC
At the end of 2023, our CEO owned 1,050,000 subscription rights. The other members of
our Executive Committee held an aggregate of 4,620 shares and 1,670,500 subscription
rights. The members of our Board of Directors (excluding our CEO) held an aggregate of
6,423 shares and 7,500 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 Dr. 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.
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Agreements with major Galapagos NV shareholders
On 14 July 2019, we and Gilead Sciences, Inc. and its affiliated companies (hereinafter
“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 and on 30 October 2023, 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 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’ Meeting 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 Dr. 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, 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 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 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) five years after the date that the warrant is issued. The issuance of this
warrant is on the agenda of the Extraordinary Shareholders’ Meeting of 30 April 2024.
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Gilead is subject to certain standstill restrictions until 10 years following the closing,
which occurred 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 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 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 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.
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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,
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
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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.
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.
In October 2023, Gilead and Galapagos agreed to further amend the collaboration.
Gilead and Galapagos agreed to terminate the existing 50/50 global development cost
sharing arrangement, with Galapagos bearing the costs going forward, and to terminate
Galapagos’ obligation to pay tiered royalties to Gilead on net sales of Jyseleca® in
Europe, in addition to other amendments.
Our Remuneration Policy
A revised remuneration policy will apply as from 1 January 2024, subject to its approval
by the Shareholders’ Meeting to be held on 30 April 2024. Such document is available on
our website.
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Remuneration Report
Introduction
At Galapagos, we are united around a single purpose: to transform patient outcomes
through life-changing science and innovation to deliver more years of life and a better
quality of life. We are committed to improving patients’ lives worldwide by targeting
diseases with high unmet needs. Our objectives are to develop best-in-class therapeutic
options. Our R&D capabilities comprise multiple drug modalities,
including small
molecules and cell therapies. Our portfolio comprises discovery and development
programs in immunology and oncology.
The objective of our Remuneration Policy is to attract, engage, and retain the diverse
qualified and expert individuals that we need to pursue our strategic and operational
objectives, whilst reinforcing our culture and sustainability ambitions for the benefit of
patients, our people and planet. Our specific goals for remuneration are:
to offer competitive opportunities for talented employees by benchmarking against
appropriate peer groups;
to incentivize exceptional and sustainable performance, aligned with corporate
achievements;
to provide differential rewards based on individual performance;
to avoid differentiation on any grounds except for performance and other proper
factors; and
to reinforce an open, and equitable culture.
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 64.62% of shareholder votes. The policy became effective
as from 1 January 2022 and continued to apply for the reporting year beginning on
1 January 2023. This Remuneration Report must be read together with the Remuneration
Policy which, to the extent necessary, should be regarded as forming part of this
Remuneration Report. The remuneration granted to the members of the Board and the
Executive Committee with respect to financial year 2023 is in line with the Remuneration
Policy unless otherwise stated.
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. We have carefully considered the feedback received and
have reviewed our remuneration practices. The results of these efforts have led to a
greater level of detail in this Remuneration Report compared to prior years. In addition,
a proposed, revised Remuneration Policy is being presented to Galapagos’ shareholders
at the 2024 annual Shareholders’ Meeting which, if approved, will be effective from
1 January 2024. We are committed to continually reviewing and improving our
Remuneration Policy and reporting practices.
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Remuneration for the Board of Directors
Remuneration structure components
In accordance with our Remuneration Policy and the decision of
the annual
Shareholders’ Meeting of 28 April 2020, the Board of Directors fee levels applicable for
financial year 2023 were as set out in the table below. Note that the remuneration of
the Directors does not include any variable remuneration or benefits, except for tax filing
support in respect of Galapagos’ remuneration.
Role
Chair(2)
Non-Executive Director
Committee Chair
Committee member
Annual cash fee level
Annual cash fee level
to acquire GLPG
shares(1)
€100,000
€50,000
€20,000
€15,000
€100,000
€50,000
N/A
N/A
(1) The non-executive Directors receive a cash compensation equal to the amount of their fixed annual cash remuneration (not taking into
account fees for Committee membership and Chairmanship) subject to the commitment by each non-executive Director to use the net
portion (after taxation) of such cash remuneration to purchase shares of Galapagos in the open market within a set period of time after
receipt of such cash remuneration. The shares that each Director so acquires must be held until at least one year after the Director leaves
the Board of Directors and at least three years after the time of acquisition. This cash compensation constitutes the equivalent of the equity
component of the members of the Board of Directors’ remuneration, as recommended by section 7.6 of the 2020 Corporate Governance
Code.
(2) The Chair fees were not payable for financial year 2023, as the CEO is only remunerated for the performance of his executive functions as
CEO and is not entitled to any additional remuneration for his mandates of Chair of the Board of Directors and Committee member.
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2023 remuneration
In accordance with our Remuneration Policy and the decision of
the annual
Shareholders' Meeting of 28 April 2020, the effective remuneration of the members of
the Board of Directors for the exercise of their mandate during the financial year ending
31 December 2023 is as set out in the following table:
Board of Directors
Audit Committee
Nomination
Committee
Remuneration
Committee
Science and
Development
Committee(2)
Cash remuneration
Equity-based
remuneration
Cash remuneration Cash remuneration Cash remuneration Cash remuneration
Directors
Chair Member
Cash
granted
to
acquire
GLPG
shares(1)
Acquired
GLPG
shares(1)
Chair Member
Chair Member
Chair Member
Chair Member
TOTAL
REMU-
NERATION
264
441
N/A
N/A
N/A
€22,253 €22,000
€50,000 €50,000
€35,870 €36,000
Stoffels IMC BV,
permanently represented by
Dr. Paul Stoffels(3)
Dr. Rajesh Parekh(4)
Dr. Mary Kerr(5)
Mr. Peter Guenter
Dr. Elisabeth Svanberg(6)
Mr. Jérôme Contamine
Dr. Dan Baker(7)
Mr. Daniel O’Day(8)
Dr. Linda Higgins(8)
Dr. Susanne Schaffert(9)
Mr. Simon Sturge(10)
(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
€50,000 €50,000
€50,000 €50,000
€14,130 €14,000
€27,610 €28,000
€50,000 €50,000
644 €20,000
€15,000
€15,611
€10,761
€15,000
€11,708
€15,611
€15,000
€5,652
€3,292
€4,389
€4,239
€4,239
€4,239
€4,389
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
635
635
644
360
180
€150,000
€117,360
€138,753
€115,000
€53,031
€82,631
€32,369
€59,849
N/A
N/A
N/A
market.
(2) Established on 19 September 2023.
(3) Chair of the Board of Directors as of 26 April 2022, Nomination Committee member as of 2 May 2022, and Science and Development Committee member as of 19 September 2023. As
combined Chair/CEO, Stoffels IMC BV is only remunerated for its executive functions as CEO and does not receive any remuneration for its mandates as Chair of the Board of Directors
or Committee member.
(4) Director until 10 June 2023, Chair of the Nomination Committee and the Renumeration Committee until 20 March 2023.
(5) Director and Audit Committee member until 18 September 2023.
(6) Chair of the Nomination Committee and the Renumeration Committee as of 21 March 2023, Science and Development Committee member as of 19 September 2023.
(7) Chair of the Science and Development Committee as of 19 September 2023.
(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.
(9) Director as of 12 June 2023, Science and Development Committee member as of 19 September 2023.
(10) Director and Audit Committee member as of 19 September 2023.
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Remuneration for Executive Committee members
Peer groups
A peer group and benchmarking exercise for Executive Committee roles was completed
between late 2022 and early 2023 in light of our strategic transformation and revised
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 resetting its strategic path and building an oncology franchise where attracting
and retaining highly specialized expertise in an international labor market is essential to
succeed.
Both European and U.S. peer groups were found appropriate 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. The peer groups listed below consist of publicly listed
biotechnology and pharmaceutical companies, selected considering size, international
growth ambitions and, to the extent possible, business model, lifecycle stage and
therapeutic areas. These benchmarks support the Board, upon recommendation of 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. The Remuneration Committee looks
at each Executive Committee member's home market as the primary reference point
with consideration also given the internal talent market in which they operate, have
operated or could operate. The Remuneration Committee strives to take a balanced
and responsible approach, in particular with long-term incentives where competitive
practice on quantum and structure can vary significantly between the U.S. and
elsewhere.
European peers
Genmab A/S
Argenx SE
Jazz Pharmaceuticals PLC
Ipsen SA
U.S. peers
United Therapeutics Corp
Neurocrine Biosciences Inc
Sarepta Therapeutics Inc
Exelixis Inc
Swedish Orphan Biovitrum AB
Ionis Pharmaceuticals Inc
Ascendis Pharma A/S
Alkermes Plc
Idorsia Ltd
Immunocore Holdings PLC
MorphoSys AG
Uniqure NV
Vir Biotechnology Inc
Amicus Therapeutics Inc
SAGE Therapeutics Inc
Ligand Pharmaceuticals Inc
Kymera Therapeutics Inc
Ironwood Pharmaceuticals Inc
Agios Pharmaceuticals Inc
Nektar Therapeutics
FibroGen Inc
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Finally, the BEL20 (the benchmark stock market index of Euronext Brussels) general
industry peer group (excluding financial services companies) is considered to ensure
there is 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 only reference to inform our pay policy.
2023 remuneration summary
In accordance with our Remuneration Policy, the remuneration of the members of the
Executive Committee for the exercise of their mandate during the financial year ending
31 December 2023 was as set out in the following table:
Executive Committee
Fixed remuneration
Variable remuneration
Base salary
Other
compo-
nents(1)
Pension
Annual
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
€750,000
€0.00
€0.00
€506,250
€647,536
€67,500
€1,971,286
Fixed: 38%
Variable: 62%
Other ExCom members(5)
(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 annual cash bonus awarded to each Executive Committee member in respect of 2023 and paid in April 2024.
(3) During financial year 2023, RSUs vested under RSU plans 2019.II, 2020.I, 2020.II, 2021.I, 2021.II, 2021.IV, 2022.I and 2022.II and pay-outs occurred accordingly.
(4) The value of the subscription rights ("SRs") granted during the financial year 2023 is calculated by comparing the exercise price with the average share price of the share as quoted on
€735,000 €2,127,645
€1,605,839
€5,083,171
€304,633
€101,250
€208,804
Fixed: 42%
Variable: 58%
Euronext Brussels and Amsterdam during the financial year 2023.
(5) Pursuant to the applicable Belgian legislation for the one-tier governance system, we hereby disclose the remuneration of the other Executive Committee members on an aggregated
basis. This includes remuneration paid to Bart Filius until 30 June 2023 and to Thad Huston as of 1 July 2023.
Fixed remuneration
Base salaries
Base salary is set to reflect responsibilities, relevant experience and competence, and
market rates for equivalent positions. The Board, upon recommendation of the
Remuneration Committee, decided that for the financial year 2023 each member of the
Executive Committee received the base salary, identified individually for the CEO and in
aggregate for other members of the Executive Committee in the total remuneration table
above. In particular, the base salary for the CEO remained unchanged in 2023.
Pension and other components
In addition, the members of the Executive Committee are provided with various benefits
in line with our Remuneration Policy such as a retirement plan, insurance programs
(including life insurance, disability and health), company cars and the provision of
certain tax services. The pension and other components of the remuneration of each
Executive Committee member are summarized in the total remuneration table above.
Short-term variable remuneration
Upon recommendation of the Remuneration Committee, the Board of Directors
determined an overall achievement of 90% (out of a maximum of 100%) against the
2023 corporate objectives. In arriving at this determination, the Board considered
performance against objectives set (highlights of which are set out in the table below),
management of unforeseen developments as well as achievements towards the long-
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term strategic goals of Galapagos' transformation into a pure-play R&D biotechnology
company, entering into the new therapeutic area of oncology with a streamlined
organization set up for future growth. As part of this transformation, Galapagos' research
and discovery capabilities and employees based in Romainville, France, were transferred
to NovAliX, and the Company signed a Share and Asset Purchase Agreement with
Alfasigma for the transfer of the Jyseleca® business. The latter transaction closed in
January 2024. The Jyseleca® divestiture, streamlining of the operations and transitioning
of Galapagos into a pure-play R&D biotechnology company were considered key value-
drivers and accomplishments for the Company.
2023 Corporate Objectives
(each equally weighted)
Corporate
Cash Burn
Deliver on cash burn guidance announced in FY results
Quality & compliance
Being inspection ready related to file submission
Maintaining active operating licences without critical observations
Achieving training compliance targets
No material weakness SOx
People
Hire and retain senior leadership capabilities in core therapeutic areas
of oncology and immunology
Support the growth in oncology per strategic workforce plan
Set-up U.S. organization footprint including clinical development &
regulatory capabilities
ESG
Confirm the ESG strategy & start executing on this
Prepare for regulatory requirements (CSRD)
We remained disciplined in our spending and delivered on our cash burn
guidance of €380-420 million for 2023 (full year 2023 cash burn: €415
million). We also laid the foundation for a sustainable and R&D focused
capital allocation through the Jyseleca® divestiture and streamlining of
the remaining organization.
Quality and Compliance objectives were met across the board, as we
continue to further strengthen our capabilities and systems.
From a people perspective, we made good progress in staffing our
oncology therapeutic area, attracting expertise talent. The expansion of
our U.S. footprint proceeded as planned, which is an important step to
attract future talent.
We significantly ramped up our ESG activities by defining an overall ESG
strategy for Galapagos together with an implementation plan. We are on
track to meet regulatory requirements for the Corporate Sustainability
Reporting Directive (EU).
Commercial
Maximize Jyseleca®
€140-160 million net sales guidance
Reliable supply
We successfully managed the supply of Jyseleca® to patients across
Europe, and over 21,000 patients across Europe currently benefit from
the drug.
However, Jyseleca® revenues did not meet expectations. This was driven
mainly by a general JAKi class slowdown in the European market
following the Article 20 label update. Full year 2023 Jyseleca® revenues
came in at €112 million, below our original guidance and within the
restated guidance at H1 2023 of €100-120 million.
As a consequence of the market dynamics, we took deliberate action to
conduct a strategic review of Jyseleca® mid 2023 and pivoted to a
divestiture of the business in H2 2023, with an agreement being signed
before year-end and closing in January 2024 (see more under Business
Development).
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2023 Corporate Objectives
(each equally weighted)
Immunology
Advance our immunology portfolio
Conduct multiple Phase 1/2 trials
Conduct multiple discovery programs and deliver preclinical leads
Advance CAR-T programs in immunology
We started recruitment into the DM and SLE Phase 2 trials with our TYK2
inhibitor GLPG3667 and are progressing both studies successfully .
While we have not yet nominated preclinical product candidates, we
have several preclinical immunology programs running in discovery.
We decided not to advance our CAR-T program with GLPG5101 in rSLE (or
other immunology indications) into the clinic.
Oncology
Build a pipeline of best-in-class oncology therapies
Start CAR-T NHL & CLL expansion cohorts, start MM CAR-T Phase 1/2
trial in MM in Europe
File INDs for CD19 and MM
Regulatory progress for the oncology programs
Build out point-of-care manufacturing network in EU
Start-up & roll-out of US sites for point-of-care manufacturing network
Initiate multiple other discovery programs and deliver preclinical
leads
Business Development
Execute Business Development transactions
Execute an acquisition (in-licensing or M&A), in line with Board-
approved strategy
We progressed our Phase 1/2 CAR-T studies with GLPG5101 in NHL and
with GLPG5201 in CLL/RT and reported encouraging preliminary safety
and efficacy data at ASH in December. We also started a Phase 1/2 CAR-T
study with GLPG5301 in MM. As a result, we now have three clinical
studies running on our point-of-care manufacturing platform.
We made regulatory progress for our oncology programs. However, as
the FDA requires that the data from the ongoing tech transfer to a first
U.S. site are part of the filing package, we did not yet file the IND
submissions in the U.S.
In 2023, we have been working on building out our point-of-care
manufacturing network in Europe as well as the U.S. We currently have
five centers open in three European countries (Belgium, The Netherlands,
and France), and in 2023, we signed a contract with Landmark Bio out of
Boston, our first U.S. site. We are in different stages of negotiations with a
number of parties to open additional sites in the U.S. and in Europe.
While we have not yet nominated preclinical product candidates, we
have multiple preclinical oncology programs running in Discovery, across
modalities.
Accelerating innovation and building our pipeline through strategic
partnerships and M&A remains our focus. Throughout 2023, multiple
clinical stage assets were reviewed in detail, and as we remain selective,
disciplined, and science-driven in our pursuit of transformational
medicines with best-in-class potential, we have not executed on any.
Several research collaborations were set up to accelerate our early-stage
pipeline.
We executed an agreement to transfer the entire Jyseleca® business to
Alfasigma, including the European and UK Marketing Authorizations, and
the commercial, medical affairs, and development activities for
Jyseleca®, as well as 400 positions in 14 European countries. This
transaction secured continued access to the product to over 21,000
patients in Europe. We move forward with a streamlined portfolio and
enhanced focus, enabling more R&D investment.
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The Board considered a 90% corporate funding level for 2023 achievements. This is
applicable to the wider Galapagos workforce for the corporate component of their bonus
funding. The Board considered this level of funding for the CEO, upon recommendation
of the Remuneration Committee, and for the other Executive Committee members, upon
proposal of the CEO, together with the individual performance of Executive Committee
members, in order to determine the individual annual bonus outcomes for 2023 set out
in the total remuneration table above. These 2023 annual bonuses will be paid in April
2024. In addition, a number of RSUs corresponding to these bonuses will be granted to
the current members of the Executive Committee as part of a 2024 RSU grant. Please see
the Section “Long-term variable remuneration” for more information on RSUs.
Long-term variable remuneration
The total remuneration table above under Section “2023 remuneration summary” sets
forth the following:
The value of the RSUs vested and paid out in 2023 for each member of the Executive
Committee. During 2023, there were RSU vestings under eight different RSU plans:
Plan 2019.II, Plan 2020.I, Plan 2020.II, Plan 2021.I, Plan 2021.II, Plan 2021.IV, Plan
2022.I, and Plan 2022.II. The pay-outs to the Executive Committee members occurred
accordingly and the aggregate amounts are set forth in the total remuneration table
above.
The value of the subscription rights granted during the financial year 2023 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 2023.
In determining the annual equity awards made to Executive Committee members in
the financial year 2023, the Board considered a number of factors, including company
performance, individual performance and ability to drive future value creation in the
context of the current business transformation, the overall retention value of past equity
awards and competitive levels of equity compensation for similarly positioned
executives based on analysis of data from our disclosed peer groups.
As a result, the following equity awards were made to Executive Committee members in
financial year 2023:
325,000 Subscription rights under Subscription Right Plan 2023 BE, of which 50,000
were granted to the CEO
21,970 RSUs under Plan 2023.I, of which 9,695 were granted to the CEO
309,096 RSUs under Plan 2023.II, of which 129,276 were granted to the CEO
Further reference is made to the Equity components of the remuneration section,
which contains, among others, a description of the 2023 grant of subscription rights and
RSUs.
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Further information on equity-based remuneration
Subscription rights awarded, exercised or expired
In 2023, we issued Subscription Right Plan 2023 BE for the benefit of Executive
Committee members. The final number of accepted subscription rights was enacted by
the notarial deeds of 8 May, 7 July and 28 August 2023. Under the plan, the subscription
rights have a lifetime of eight years, an exercise price of €35.11 and €38.58, respectively,
and 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 2027. Good and bad leaver rules apply in the event of
termination prior to the end of the vesting period.
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 Corporate Governance 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.
The table below sets out further information in relation to subscription rights granted to
the Executive Committee and, historically, the Board.
Plan(1)
Grant date
Vesting period
Exercise period
Exercise
price
Number of
SRs out-
standing
per 31/12/
2023
Number of
SRs exer-
cisable per
31/12/
2023
SRs
offered &
accepted
during
2023
SRs
exercised
during
2023
SRs
expired
in 2023
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
36 months
1/36 per month
36 months
1/36 per month
36 months
1/36 per month
36 months
1/36 per month
36 months
1/36 per month
36 months
1/36 per month
36 months
1/36 per month
01/01/2021
– 16/05/2025
01/01/2022
– 18/04/2026
01/01/2023
– 10/04/2027
01/01/2021
– 16/05/2025
01/01/2022
– 18/04/2026
01/01/2023
– 10/04/2027
01/01/2023
– 10/04/2027
€80.57
15,000
15,000
€79.88
15,000
15,000
€95.11
15,000
15,000
€80.57
7,500
7,500
€79.88
7,500
7,500
€95.11
7,500
7,500
€95.11
7,500
7,500
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Directors(2)
Dr. Rajesh Parekh
Dr. Mary Kerr
Mr. Peter Guenter
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CORPORATE GOVERNANCE
Plan(1)
Grant date
Vesting period
Exercise period
Exercise
price
Number of
SRs out-
standing
per 31/12/
2023
Number of
SRs exer-
cisable per
31/12/
2023
SRs
offered &
accepted
during
2023
SRs
exercised
during
2023
SRs
expired
in 2023
Executive Committee members
Stoffels IMC BV,
permanently
represented by
Dr. Paul Stoffels
Mr. Bart Filius
Mr. Michele Manto
SR Plan
2022 (B)
SR Plan
2023 BE
25/03/2022
08/05/2023
WP 2017
30/08/2017
WP 2018
24/08/2018
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
SR Plan
2022 BE
16/06/2020
02/07/2021
07/07/2022
WP 2017
16/07/2017
WP 2018
18/06/2018
WP 2019
12/07/2019
SR Plan
2020
SR Plan
2021 BE
SR Plan
2022 BE
SR Plan
2023 BE
16/06/2020
02/07/2021
07/07/2022
28/08/2023
100%
3rd year after year of
grant 01/01/2026
100%
3rd year after year of
grant 01/01/2027
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
100%
3rd year after year of
grant 01/01/2027
01/01/2026
– 25/01/2030
01/01/2027
– 05/05/2031
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
01/01/2027
– 05/05/2031
€50.00 1,000,000
€35.11
50,000
0
0
50,000
€80.57
60,000
60,000
€79.88
80,000
80,000
€95.11
65,000
65,000
€168.42
50,000
€64.76
50,000
€57.46
68,000
0
0
0
€80.57
60,000
60,000
€79.88
30,000
30,000
€95.11
40,000
40,000
€168.42
30,000
€64.76
30,000
€57.46
24,000
€35.11
25,000
0
0
0
0
25,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
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Plan(1)
Grant date
Vesting period
Exercise period
WP Plan
2018
WP Plan
2019
SR Plan
2020
SR Plan
2021 BE
SR Plan
2022 BE
SR Plan
2023 BE
SR Plan
2022 BE
SR Plan
2023 BE
SR Plan
2023 BE
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 01/01/2027
100%
3rd year after year of
grant 01/01/2026
100%
3rd year after year of
grant 01/01/2027
100%
3rd year after year of
grant 01/01/2027
18/06/2018
12/07/2019
16/06/2020
02/07/2022
07/07/2022
07/07/2023
09/11/2022
28/08/2023
28/08/2023
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
01/01/2027
– 05/05/2031
01/01/2026
– 06/05/2030
01/01/2027
– 05/05/2031
01/01/2027
– 05/05/2031
Exercise
price
Number of
SRs out-
standing
per 31/12/
2023
Number of
SRs exer-
cisable per
31/12/
2023
SRs
offered &
accepted
during
2023
SRs
exercised
during
2023
SRs
expired
in 2023
€79.88
26,000
26,000
€95.11
20,000
20,000
€168.42
15,000
€64.76
22,500
€57.46
18,000
€35.11
25,000
€51.58
30,000
€35.11
25,000
0
0
0
0
0
0
25,000
25,000
€38.58
200,000
0
200,000
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Annelies Missotten
Valeria Cnossen
Thad Huston
(1) Warrant Plan (WP) and Subscription Right Plan (SR Plan)
(2) Dr. Dan Baker, Dr. Elisabeth Svanberg, Mr. Jérôme Contamine, Mr. Daniel O'Day, Dr. Linda Higgins, Dr. Susanne Schaffert and Mr. Simon Sturge do not have any subscription rights.
At the end of 2023, Stoffels IMC BV (permanently represented by Dr. Paul Stoffels) held
1,050,000 subscription rights, Mr. Michele Manto held 2,020 shares and 239,000
subscription rights, Ms. Annelies Missotten held 2,600 shares and 126,500 subscription
rights, Ms. Valeria Cnossen held 55,000 subscription rights, and Mr. Thad Huston held
200,000 subscription rights.
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RSUs offered to, vested or expired for the Executive
Committee members
In 2023, the Executive Committee members, with the exception of Mr. Bart Filius, were
offered new RSUs under 2023 RSU Annual Long-Term Incentive Plan and under the 2023
RSU Retention Plan, subject to acceptance. The members of the Executive Committee
accepted all RSUs offered to them. The grant under the 2023 RSU Annual Long-Term
Incentive Plan is the form under which the annual bonus for 2022 was paid (please refer
to the Remuneration Report of 2022). Such RSU grant will vest in full three years after the
offer date.
The grant under the 2023 RSU Retention Plan has a four-year vesting period, with 25%
vesting each year and a first vesting date on 1 May 2024.
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.
No RSUs expired during financial year 2023. The table below sets forth further
information in relation to RSUs offered and accepted by each Executive Committee
members and vested and paid out during 2023:
Executive Committee member
Plan
Offer date
Vesting period
Vesting date
Number of RSUs
offered and
accepted
RSUs vested
during 2023
Stoffels IMC BV,
permanently represented by
Dr. Paul Stoffels
Plan 2022.II
05/05/2022
Plan 2023.I
08/05/2023
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2023.II
09/05/2023
25%/year
Four-year vesting period
01/05/2023
01/05/2024
01/05/2025
01/05/2026
08/05/2026
01/05/2024
01/05/2025
01/05/2026
01/05/2027
74,408
18,602
9,695
129,276
0
0
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Executive Committee member
Plan
Offer date
Vesting period
Vesting date
Mr. Bart Filius(1)
Mr. Michele Manto
Plan 2019.I
16/10/2019
100%
three years after offer date
Plan 2019.II
16/10/2019
Plan 2019.III
16/10/2019
Plan 2020.I
06/05/2020
25%/year
Four-year vesting period
50%
two years after offer date
50%
three years after offer date
100%
three years after offer date
Plan 2020.II
06/05/2020
Plan 2021.I
05/05/2021
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2021.IV
24/09/2021
Plan 2022.I
03/05/2022
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2022.II
05/05/2022
25%/year
Four-year vesting period
Plan 2019.II
16/10/2019
Plan 2020.I
06/05/2020
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2020.II
06/05/2020
Plan 2021.I
05/05/2021
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2021.IV
24/09/2021
Plan 2022.I
03/05/2022
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2022.II
05/05/2022
Plan 2023.I
08/05/2023
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2023.II
09/05/2023
25%/year
Four-year vesting period
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
08/05/2026
01/05/2024
01/05/2025
01/05/2026
01/05/2027
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Galapagos NV Annual Report 2023
Number of RSUs
offered and
accepted
RSUs vested
during 2023
5,000
0
17,924
4,481
16,922
1,452
11,148
1,011
0
1,452
2,787
0
61,719
15,429
3,570
0
57,872
14,468
5,121
612
5,308
835
30,859
2,550
24,804
4,720
43,092
1,280
612
1,327
0
7,714
0
6,201
0
0
CORPORATE GOVERNANCE
Executive Committee member
Plan
Offer date
Vesting period
Vesting date
Ms. Annelies Missotten
Plan 2019.II
16/10/2019
25%/year
Four-year vesting period
Plan 2020.I
06/05/2020
25%/year
Four-year vesting period
Plan 2020.II
06/05/2020
25%/year
Four-year vesting period
Plan 2021.I
05/05/2021
25%/year
Four-year vesting period
Plan 2021.II
06/05/2021
25%/year
Four-year vesting period
Plan 2022.I
03/05/2022
25%/year
Four-year vesting period
Plan 2022.II
05/05/2022
Plan 2023.I
08/05/2023
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2023.II
09/05/2023
25%/year
Four-year vesting period
Ms. Valeria Cnossen
Plan 2022.II
05/08/2022
Plan 2023.I
08/05/2023
25%/year
Four-year vesting period
100%
three years after offer date
Plan 2023.II
09/05/2023
25%/year
Four-year vesting period
Mr. Thad Huston
Plan 2023.II
15/06/2023
25%/year
Four-year vesting period
(1) On the leaver date of Mr. Bart Filius, his outstanding RSUs became null and void, being 81,632 RSUs.
01/05/2020
01/05/2021
01/05/2022
01/05/2023
01/05/2021
01/05/2022
01/05/2023
01/05/2024
01/05/2021
01/05/2022
01/05/2023
01/05/2024
01/05/2022
01/05/2023
01/05/2024
01/05/2025
01/05/2022
01/05/2023
01/05/2024
01/05/2025
01/05/2023
01/05/2024
01/05/2025
01/05/2026
01/05/2023
01/05/2024
01/05/2025
01/05/2026
08/05/2026
01/05/2024
01/05/2025
01/05/2026
01/05/2027
01/05/2023
01/05/2024
01/05/2025
01/05/2026
08/05/2026
01/05/2024
01/05/2025
01/05/2026
01/05/2027
01/05/2024
01/05/2025
01/05/2026
01/05/2027
Number of RSUs
offered and
accepted
RSUs vested
during 2023
1,536
384
332
956
1,488
2,708
1,766
2,980
3,246
43,092
9,512
4,309
43,092
50,544
83
239
372
677
444
745
0
0
2,378
0
0
0
Similarly to previous years, in 2024, a number of RSUs corresponding to the 2023 annual
bonuses will be granted to the current members of the Executive Committee as part of a
2024 RSU grant.
162
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Evolution of remuneration and Company
performance
The below table shows the annual change of remuneration of each Board member, the
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 and the Executive Committee, over the five
most recent financial years.
Comparative table of remuneration and company performance
2023
% change
2022
% change
2021
% change
2020
% change
2019
Remuneration(1)
Executive Committee(2) (3)
Stoffels IMC BV, permanently
represented by Dr. Stoffels(4)
Other Executive Committee
members(4)
Board of Directors(5) (6)
Dr. Rajesh Parekh(7)
Dr. Mary Kerr(8)
Mr. Peter Guenter(9)
Dr. Elisabeth Svanberg(10)
Mr. Jérôme Contamine(11)
Dr. Dan Baker(12)
Dr. Susanne Schaffert(13)
Mr. Simon Sturge(14)
€1,256,250
€1,971,286
€2,340,839
€4,569,734
40%
€900,000
34% €1,470,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
3% €2,276,838
2% €2,233,625
27% €1,756,932
-80% €8,980,561
-45% €8,380,367
71% €4,893,184
22% €3,995,216
-73% €14,609,054
€31,031
€53,031
€46,631
€82,631
€65,000
€115,000
€88,753
€138,753
€100,000
€150,000
€67,360
€117,360
€31,849
€59,849
€18,369
€32,369
-69%
-68%
-28%
-28%
0%
0%
37%
21%
47%
47%
98%
72%
N/A
N/A
N/A
N/A
€99,643
€165,643
€65,000
€115,000
€65,000
€115,000
€65,000
€115,000
€68,131
€102,131
€34,066
€68,066
N/A
N/A
N/A
N/A
-17%
-25%
0%
0%
0%
0%
0%
0%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
€120,000
€220,000
€65,000
€115,000
€65,000
€115,000
€65,000
€115,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0%
0%
0%
0%
0%
0%
47%
47%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
€120,000
€220,000
€65,000
€115,000
€65,000
€115,000
€44,164
€77,999
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
33%
-62%
44%
-60%
117%
-58%
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
€90,000
€577,950
€45,000
€288,975
€30,000
€273,975
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
163
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Company performance
Financial KPIs (thousand of €, except for the stock price and number of employees)
Comparative table of remuneration and company performance
Operational Cash burn
(-)/operational cash flow
R&D expenditure(15)
Cash position on 31 Dec(16)
# of employees on 31 Dec(17)
Stock price performance (Last
trading day FY)
-414,824
431,471
3,684,508
1,123
-19%
-16%
-10%
-16%
-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
24%
-11%
48%
427,320
5,780,832
1,003
36.99
-11%
41.35
-16%
49.22
-39%
80.48
-57%
186.50
Average remuneration of employees on FTE basis
Employees of the Group(18)
(1) The remuneration overview contains for the CEO, other Executive Committee members, and Directors two separate rows, whereby the first row sets out their cash remuneration,
21% €102,471.00
-2% €104,290.00
2% €123,958.47
€125,919.59
4% €100,682.00
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 awarded during the financial year 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 2023 the exercise price of the Subscription
Right Plan 2023 BE is compared with the average share price as quoted on Euronext Brussels and Amsterdam during the financial year 2023.
(4) The other Executive Committee members during financial year 2023 are Mr. Bart Filius (until 30 June 2023), Mr. Thad Huston (as of 1 July 2023), Mr. Michele Manto, Ms. Annelies
Missotten, and Ms. Valeria Cnossen. Their remuneration over the five year period is included under the "Other Executive Committee members."
(5) The first row shows the total cash remuneration of each member of the Board of Directors, being the Board fees. This table excludes the Chair, Stoffels IMC BV, who is not remunerated
for its mandate as Chair of the Board of Directors or any Committee mandate, and Daniel O'Day and Linda Higgins, the Gilead Board representatives which are not remunerated for
their Board or Committee mandates.
(6) 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.
(7) Director until 10 June 2023.
(8) Director until 18 September 2023.
(9) Director as of 30 April 2019.
(10) Director as of 28 April 2020.
(11) Director as of 26 April 2022.
(12) Director as of 26 April 2022.
(13) Director as of 12 June 2023.
(14) Director as of 19 September 2023.
(15) R&D expenditure presented on this line reflects the total Group related expenditure including the Jyseleca business transferred to Alfasigma on 31 January 2024 presented as
discontinued operations in our 2023 consolidated financial statements, and prior to financial year 2021 also including Fidelta, our fee-for-service business sold to Selvita on 4 January
2021, classified as discontinued operations in our 2020 consolidated financial statements.
(16) Cash position on 31 December 2023 included €7 thousands of cash held in subsidiaries transferred to Alfasigma on 31 January 2024 and classified as assets held for sale in our 2023
consolidated financial statements. 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.
(17) The number of employees per 31 December 2023 includes employees and insourced personnel (external contractors). At 31 December 2023, the number of employees included 390
employees transferred to Alfasigma on 31 January 2024. 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.
(18) 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 2023 year-end process, the actual annual figures for employees had not been finalized by the date of this report. Therefore, 2023 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.
164
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Ratio between the highest and lowest remuneration
The ratio between the highest and lowest remuneration at Galapagos during financial
year 2023 is: 29:1.
The ratio is calculated on the basis of the lowest FTE pay per 31 December 2023,
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 2023 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 2023 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 CEO to be equivalent to one year of the CEO’s annual
base salary and by the other members of the Executive Committee to be equivalent to six
months of the relevant Executive Committee member’s annual base salary. Thresholds
are re-calculated on an annual basis and need to be reached within four years. At this
stage all Executive Committee members (in office since 2022 and 2023 respectively) are
building their shareholding.
Contractual provisions regarding compensation for
severance for Executive Committee members
In 2023, all Executive Committee members have provided their services under
agreements with the Galapagos Group, with a notice period, or indemnity in lieu of
notice period, of nine months for the CEO and six months for the other Executive
Committee members. The agreements do not provide for severance payments. In the
event of termination, Galapagos may enter into non-competition undertakings with the
CEO and the other Executive Committee members providing for non-competition
indemnities. In the event their contract with the group is terminated as a result of a
change of control of Galapagos, the CEO and the other Executive Committee members
would be entitled to the immediate vesting of subscription rights and severance
compensation of (i) 12 months' base salary for the CEO and (ii) nine months' base salary
for the other Executive Committee members.
165
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Severance payments
On 2 May 2023, Galapagos announced the departure of Mr. Bart Filius, President, COO
and CFO and Executive Committee member per 30 June 2023. Upon substantiated
recommendation of the Remuneration Committee, the Board approved a termination
compensation of €1,650,000, consisting of compensation for a non-compete obligation
for 12 months in an amount of €545,000, and a termination amount of €1,105,000 taking
into account loss of 2023 bonus and loss of unvested RSUs. Effective 1 July 2023, Mr.
Filius was no longer a member of the Executive Committee. He exercised an advisory role
until 31 December 2023, for a total consultancy fee of €330,000. The Board determined
this arrangement would best serve the interests of Galapagos, in particular given the
critical role played by the outgoing President, COO and CFO in onboarding the then new
CEO as well as remaining with Galapagos to support business continuity as a successor
was found. Mr. Bart Filius was not eligible for any equity grants (RSUs and subscription
rights) in 2023. He qualifies as a good leaver under the terms and conditions of the
relevant subscription right plans and this is not part of his termination package.
On 2 January 2024, Galapagos announced the departure of Mr. Michele Manto, CCO and
Executive Committee member per 31 December 2023. No termination compensation
was awarded. From 1 January 2024 until 31 May 2024, Mr. Manto will execute an advisory
role to support the Jyseleca® transition to Alfasigma, for which he will receive a total fee
of €191,900 and remain entitled to RSU pay-outs during this period. Mr. Manto will be
entitled to his annual cash bonus for 2023, but will not be eligible for any equity grants
(RSUs and subscription rights) in 2024. He qualifies as a good leaver under the terms and
conditions of the relevant subscription right plans.
Claw-back and malus
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 in the event of a restatement of the financial
statements that has a material negative effect on Galapagos or a material breach of our
Code of Conduct. In addition, from 1 December 2023, clawback undertakings have been
in place to comply with the new SEC rules to recover erroneously awarded incentive-
based compensation if Galapagos is required to prepare an accounting restatement due
to material non-compliance with any financial reporting requirement.
During the financial year 2023 no claw-back events occurred.
The RSU and subscription right plans also 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.
166
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Deviations from the Remuneration Policy
Galapagos’ Remuneration Policy sets out that the Board may decide to deviate from
any items of the policy if necessary to serve the long-term interests and sustainability
of Galapagos. Any such deviation must be discussed at the Remuneration Committee,
which will provide a substantiated recommendation to the Board.
During the financial year 2023, the Board decided to deviate from the Remuneration
Policy, considering exceptional circumstances and upon substantiated recommendation
of the Remuneration Committee, with the intention of serving the long-term interests
and sustainability of Galapagos and in view of a successful and thorough
implementation of the leadership transition whilst guaranteeing continuity, on one
occasion:
As indicated above, on 2 May 2023, a termination package for Mr. Bart Filius was
approved, being a termination compensation of €1,650,000, including compensation
for a non-compete obligation for 12 months. This total termination package did not
exceed his total annual remuneration for the financial year 2022. As a result, no
shareholder approval for Mr. Filius' termination package is required in accordance
with Belgian law.
167
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
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 (25.35% on 31 December 2023) in Galapagos NV,
and (ii) the fact that Gilead is entitled to propose two candidates to be appointed to
the Board of Directors of Galapagos NV under the share subscription agreement dated
14 July 2019, as amended.
On 30 October 2023, we entered into a related party transaction with Gilead within the
meaning of article 7:97 of the Belgian Companies Code, by agreeing to further amend the
collaboration agreement. Gilead and Galapagos agreed to terminate the existing 50/50
global development cost sharing arrangement, with Galapagos bearing the costs going
forward, and to terminate Galapagos’ obligation to pay tiered royalties to Gilead on net
sales of Jyseleca® in Europe, in addition to other amendments.
The Board of Directors applied the related party transaction approval procedure as set
forth in article 7:97 of the Belgian Companies Code. Within the context of this procedure,
a committee of three independent members of the Board of Directors of Galapagos
(the “Committee”) issued an advice to the Board of Directors in which the Committee
assessed the amended terms of the collaboration agreement. In its advice to the Board
of Directors, the Committee concluded the following: “The Committee believes that,
under the circumstances, the proposed amendments to the filgotinib collaboration
between Gilead and Galapagos are reasonable and fair from the point of view of
Galapagos and its shareholders, and in line with the strategy of the Company. The
proposed amendments offer an important opportunity to have autonomy on
development and commercial activities in Europe in its ongoing collaboration with
Gilead.Theproposedamendmentsalsocomewithanumberofchallengesandrisks,
but these are not unreasonable and can be managed going forward. The Committee
therefore believes that the proposed amendments to the collaboration with Gilead in
relation to filgotinib are in the interest of Galapagos, and in any event not manifestly
abusive.Inviewhereof,theCommitteeissuesafavourableandunqualifiedopinionto
theBoardofDirectorsofGalapagos.” The Board of Directors did not deviate from the
Committee’s advice.
The assessment by the Statutory Auditor of Galapagos of the advice of the Committee
and the minutes of the Board of Directors is as follows: “Based on our assessment,
nothing has come to our attention that causes us to believe that the financial and
accounting data reported in the advice of the Ad hoc committee of the independent
members of the Board of Directors dated 30October 2023 and in the minutes of the
Board of Directors dated 30October 2023, which justify the proposed transaction, are
notconsistent,inallmaterialrespects,comparedtotheinformationwepossessinthe
context of our assignment.”
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 32.
168
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
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.
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 7:96 of
the Belgian Companies Code. In the event a conflict of interest 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 to the above, the Company’s Corporate Governance Charter and Related
Person Transaction Policy contain certain procedures for
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 members, Executive
Committee members, major shareholders, or any of their immediate family members
and affiliates. Without prejudice to the procedures as set out in the applicable laws,
these policies provide (among others) 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 any of its Board members 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 (but shall not be published), and the relevant Board member
cannot participate in the deliberation or voting on the concerned item on the agenda.
In 2023, the following conflicts of interests between Galapagos NV and a Director within
the meaning of article 7:96 of the Belgian Companies Code were noted:
In a meeting of the Board of Directors held on 20 February 2023, the following was
reported in connection with the proposed compensation of the CEO (cash bonus and
RSUs): theChairinformedtheBoardofDirectorsofaconflictofinterest,concerning
the proposed compensation of the CEO. The Board considered that said
compensation was a justified reward for the results achieved by the CEO in 2022.
The Board shared the opinion of the Remuneration Committee that the proposed
compensation is justified and reasonable. The Chair did not take part in the
deliberation and vote concerning this decision.
169
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
In a meeting of the Board of Directors held on 2 May 2023, the following was reported
in accordance with article 7:96 of the Belgian Companies Code in connection with
the proposed grants of subscription rights and RSUs to the CEO under the 2023 plans:
the Chair informed the Board of Directors of a conflict of interest, concerning the
proposedgrantsofsubscriptionrightsandRSUstotheCEOunderthe2023plans.
TheBoardconsideredthatsaidcompensationwasajustifiedrewardfortheresults
achieved by the CEO in 2022, in line with the contractual arrangement with the
CEOexecutedin2022andwiththeCompany’sRemunerationPolicy.Furthermore,
the Board deemed the proposed grants to be an important tool in the retention
of Stoffels IMC BV as CEO of the Company and considered that these grants have
no material impact on the financial position of the Company. The Board shared
the opinion of the Remuneration Committee that the proposed compensation is
justifiedandreasonable.TheChairdidnottakepartinthedeliberationandthevote
concerning this decision.
In a meeting of the Board of Directors held on 5 May 2023, the following was reported
in accordance with article 7:96 of the Belgian Companies Code in connection with
the proposed issuance of the 2023 subscription right plans: TheCEOandalsoChair
oftheBoardofDirectors,StoffelsIMCBV,reportedpriortothismeetingthathehad
a conflict of interest within the meaning of article 7:96 of the Belgian Companies
Codeinconnectionwiththeissuanceofthenumberofsubscriptionrightsunderthe
SubscriptionRightPlan2023BE,SubscriptionRightPlan2023RMV,andSubscription
Right Plan 2023 ROW, for the benefit of employees of the Company and its
subsidiaries, with cancellation of the preferential subscription right of the existing
shareholdersintheframeworkoftheissuanceofthesesubscriptionrightsandthe
related possible future capital increase, as the CEO will be a beneficiary under
SubscriptionRightPlan2023BE.TheBoardofDirectors,upontherecommendation
oftheRemunerationCommittee,isoftheopinionthattheproposedagendaitems
and the proposed grant of subscription rights to the CEO are consistent with the
Company’sRemunerationPolicyandarejustifiedandreasonable.Thenatureofthe
proposeddecisionandthefinancialimpactontheCompanyaredescribedinmore
detailintheabove-mentionedspecialreportoftheBoardofDirectors.Inaccordance
withtheprocedureprovidedforinarticle7:96oftheBelgianCompaniesCode,the
CEOandalsoChairoftheBoardofDirectors,StoffelsIMCBV,doesnotattendthis
meeting and will not take part in the deliberation and the vote.
In a meeting of the Board of Directors held on 30 October 2023, the following was
reported in accordance with article 7:96 of the Belgian Companies Code in
connection with the proposed amendment to the Galapagos-Gilead filgotinib
agreement: The Chair reported that, prior to this meeting, Daniel O’Day and Dr. Linda
Higgins had informed him that, since they are representatives of Gilead, they might
have a conflict of interest in relation to the resolutions to be passed by the Board of
Directors in relation to this agenda topic. Accordingly, Daniel and Linda had recused
themselves for this part of the meeting, and did not take part in the deliberation and
resolutions in relation to this agenda topic.
170
Galapagos NV Annual Report 2023
CORPORATE GOVERNANCE
Code of Conduct
We have established a Code of Conduct to ensure that our members of the Board of
Directors and Executive Committee and employees are making ethical and compliant
decisions and acting with integrity, ethics and respect for human rights when conducting
Galapagos’ business and performing their day-to-day duties. We expect any conflicts of
interest to be addressed appropriately, and corruption and fraud prevented. To this end,
we give various trainings, including on our Code of Conduct to all our employees and
consultants. This year, 94% of our employees completed the Code of Conduct training
and we measure against all employees, including those that may be on long term leave
or ill.
Our Code of Conduct is available on our website (www.glpg.com).
At the beginning of 2023, we made some updates to our Code of Conduct to ensure that
it continues to reflect who we are as an organization, including an explicit applicability
of our Code of Conduct to our suppliers and business partners and more ESG related
provisions.
One breach of our Code of Conduct was escalated to the Audit Committee in 2023.
Appropriate measures were taken to address this breach.
171
Galapagos NV Annual Report 2023
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, the financial position, and the results of Galapagos NV and
the companies included in the consolidation as of 31 December 2023.
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 2023, gives a true and fair view of the development, the results, and the
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 30 April 2024) to approve
the non-consolidated annual accounts of the Company for the financial year ended on
31 December 2023 (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, each of the former Directors who was in office during the financial
year ended on 31 December 2023, and the statutory auditor for the performance of their
respective mandates during the financial year ended on 31 December 2023.
Mechelen, 26 March 2024
On behalf of the Board of Directors
Jérôme Contamine
Chair of the Audit Committee and member of the Board of Directors
Stoffels IMC BV
permanently represented by Dr. Paul Stoffels Chair
of the Board of Directors
172
Galapagos NV Annual Report 2023
Financial
statements
2023 consolidated and non-consolidated
financial statements
Pioneering science to
transform patient outcomes
FINANCIAL STATEMENTS
Consolidated financial statements
Consolidated statements of income and
comprehensive income/loss (-)
Consolidated income statement
(thousands of €, except per share data)
Collaboration revenues
Total net revenues
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
Profit/loss (-) before tax
Income taxes
Net loss from continuing operations
Year ended 31 December
2023
239,724
239,724
(241,294)
(5,676)
(128,289)
47,272
2022(*)
241,249
241,249
(269,797)
(3,480)
(135,155)
36,127
(88,263)
(131,056)
16,252
80,249
(2,613)
51,498
18,563
(9,854)
5,625
(70,849)
Notes
7
8
8
8
8
10
10
10
(9,613)
(3,988)
(572)
11
(71,421)
Net profit/loss (-) from discontinued operations, net of tax
215,685
(146,570)
5
Net profit/loss (-)
211,697
(217,991)
Net profit/loss (-) attributable to:
Owners of the parent
Basic and diluted earnings/loss (-) per share
Basic and diluted loss per share from continuing operations
211,697
3.21
(0.06)
(217,991)
(3.32)
(1.09)
12
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
The accompanying notes form an integral part of these financial statements.
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FINANCIAL STATEMENTS
Consolidated statement of comprehensive income / loss (-)
(thousands of €)
Net profit/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
Other comprehensive income/loss (-), net of income tax
Year ended 31 December
2023
211,697
(1,037)
392
(645)
2022(*)
(217,991)
Notes
5,324
129
5,453
Total comprehensive income/loss (-) attributable to:
Owners of the parent
211,052
(212,538)
Total comprehensive income/loss (-) attributable to owners of
the parent arises from:
Continuing operations
Discontinued operations
Total comprehensive income/loss (-), net of income tax
(4,564)
215,616
211,052
(65,953)
(146,586)
(212,538)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
The accompanying notes form an integral part of these financial statements.
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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 from continuing operations
Assets in disposal group classified as held for sale
Total 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 from continuing operations
Liabilities directly associated with assets in disposal group
classified as held for sale
Total current liabilities
Total liabilities
Total equity and liabilities
31 December
2023
2022
Notes
69,557
127,906
126,321
1,126
141,252
29,645
495,807
73,978
28,449
37,436
3,517,698
166,803
15,140
3,839,504
22,085
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
-
3,861,589
4,236,850
4,357,396
4,734,351
293,937
2,736,994
(5,890)
(1,201)
(228,274)
2,795,566
2,293
23,607
4,944
31,570
1,071,193
1,133,607
4,652
135,201
56
256,270
396,179
32,044
428,223
1,561,830
4,357,396
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
-
522,538
2,208,325
4,734,351
13
14
15
23
17
16
18
19
17
20
21
19
5
22
22
23
24
25
26
24
25
26
5
The accompanying notes form an integral part of these financial statements.
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FINANCIAL STATEMENTS
Consolidated cash flow statements
(thousands of €)
Net profit/loss (-) of the year
2023
211,697
2022
Notes
(217,991)
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
99,291
117,296
(65,763)
(16,688)
(31,373)
-
(661,062)
(4,533)
(3,789)
32,313
(28,164)
(383,618)
(463,898)
(488,487)
(3,809)
69,907
(8,170)
(12,463)
4,839
(4,433)
Net cash flow used in operating activities
(405,970)
(500,544)
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
Investment income received related to current financial
investments
Sale of current financial investments
Cash out from acquisition of subsidiaries, net of cash acquired
Cash advances and loans to third parties
Acquisition of financial assets held at fair value through profit or
loss
(18,706)
(567)
2,426
(3,390,178)
14,765
3,484,411
(7,000)
-
(13,965)
(27,389)
(9,558)
739
(2,728,634)
2,996
1,641,602
(115,270)
(10,000)
-
Net cash flow generated from/used (-) in investing activities
71,186
(1,245,514)
Payment of lease liabilities
Proceeds from capital and share premium increases from
exercise of subscription rights
Net cash flow used in financing activities
(6,771)
1,770
(5,001)
(8,182)
6,695
(1,487)
Decrease in cash and cash equivalents
(339,785)
(1,747,545)
29
29
29
29
27
26
15
14
15
20
20
20
27
27
16
24
22
Cash and cash equivalents at beginning of year
508,117
2,233,368
21
Decrease in cash and cash equivalents
(339,785)
(1,747,545)
Effect of exchange rate differences on cash and cash equivalents
(1,522)
22,293
Cash and cash equivalents at end of the year
166,810
508,117
21
The accompanying notes form an integral part of these financial statements.
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FINANCIAL STATEMENTS
Consolidated statements of changes in equity
(thousands of €)
On 1 January 2022
Net loss
Other comprehensive income
Total comprehensive income/
loss (-)
Share-based compensation
Exercise of subscription rights
On 31 December 2022
On 1 January 2023
Net profit
Other comprehensive income/
loss (-)
Total comprehensive income/
loss (-)
Share-based compensation
Exercise of subscription rights
On 31 December 2023
Share
capital
Share
premium
account
Translation
differences
Other
reserves
292,075
2,730,391
(1,722)
(10,177)
129
129
5,324
5,324
Accumul.
losses
(367,205)
(217,991)
(217,991)
88,506
1,530
293,604
5,166
2,735,557
(1,593)
(4,853)
(496,689)
Total
2,643,362
(217,991)
5,453
(212,538)
88,506
6,695
2,526,026
293,604
2,735,557
(1,593)
(4,853)
(496,689)
211,697
2,526,026
211,697
392
392
(1,037)
(1,037)
211,697
56,718
333
293,937
1,437
2,736,994
(1,201)
(5,890)
(228,274)
(645)
211,052
56,718
1,770
2,795,566
The accompanying notes form an integral part of these financial statements.
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Notes to the consolidated financial
statements
1. General information
Galapagos NV is a limited liability company incorporated in Belgium and has its
registered office at Generaal De Wittelaan L11 A3, 2800 Mechelen, Belgium. In the notes
to the consolidated financial statements, references to “we”, “us,” “the group” or
“Galapagos” include Galapagos NV together with its subsidiaries. We refer to note 33 for
a list of consolidated companies.
We are a global biotechnology company with operations in Europe and the US dedicated
to developing medicines focusing on oncology and immunology.
The components of the result presented in the financial statements include the results of the
companies mentioned in note 33 Consolidated companies as of 31 December 2023.
Our operations had 1,123 employees on 31 December 2023 (as compared to
1,338 employees on 31 December 2022) mainly working in our operating facilities in
Mechelen (the Belgian headquarters), the Netherlands, France, Switzerland, Germany,
Italy, Spain and the United Kingdom.
Effective as from 1 July 2023 we transferred our drug discovery and research activities in
Romainville, France, and 121 employees exclusively dedicated to the operation of these
activities to NovAliX, who assumes all ongoing research and discovery activities in Romainville.
On 31 January 2024 we announced that we successfully completed the transfer of the
Jyseleca® business to Alfasigma,
including the European and UK Marketing
Authorizations, the commercial, medical and development activities for Jyseleca® and
approximately 400 positions in 14 European countries. The transfer of our Jyseleca®
business has been determined to meet the criteria to be classified as held for sale and
discontinued operations in our financial statements for the year ended 31 December
2023. We also presented all income statement items fully related to the Jyseleca®
business to be transferred on a separate line “Net profit/loss (–) from discontinued
operations, net of tax” in our consolidated income statement. The consolidated income
statements for all comparative periods reported in these consolidated financial
statements were restated as well to show the discontinued operations on a separate line.
Our continuing operations had 646 employees on 31 December 2023 (as compared to 724
employees on 31 December 2022) mainly working in our operating facilities in Mechelen (the
Belgian headquarters), the Netherlands, France, Switzerland, and the United States.
We refer to note 33 for a list of the entities included in discontinued operations and to
note 5 for more details on the discontinued operations.
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2. Summary of significant transactions
Transfer of Jyseleca® business to Alfasigma
On 30 October 2023, we signed a letter of intent contemplating a transfer of the Jyseleca®
business to Alfasigma S.p.A. (Alfasigma). The final share and asset purchase agreement
was signed on 30 December 2023 and the transaction was closed on 31 January 2024.
The transfer includes the European and UK Marketing Authorizations, and the
commercial, medical affairs and development activities for Jyseleca®. In connection with
the completion of the transaction, approximately 400 of our positions in 14 European
countries transferred to Alfasigma to support business continuity and ongoing patient
access for the Jyseleca® business. We received a €50 million upfront payment in
connection with the transfer, at closing of the transaction in 2024, and are entitled
to receive potential milestone payments totaling €120 million and mid-single to mid-
double-digit royalties on European sales. We will contribute up to €40 million by June
2025 to Alfasigma for Jyseleca® related development activities. In addition, we plan to
streamline our remaining operations and further build efficiencies, with an envisaged
reduction of approximately 100 positions across the organization.
Effective 31 January 2024, following the closing of the transaction between us and
Alfasigma for the transfer the Jyseleca® business, we assigned our rights and obligations
under the Gilead filgotinib collaboration to Alfasigma, except for our right to receive
royalties from Gilead on net sales in the Gilead Territory under a separate agreement
between Gilead and us entered into in October 2023.
On 31 January 2024, we also signed a transition agreement with Alfasigma enacting
the responsibilities and services that will be provided by the parties during a transition
period for the transfer of the business. The gradual transfer of our remaining inventories
to Alfasigma is also governed by this agreement.
We refer to note 5 for more details on the discontinued operations.
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 of €3,569.8 million ($3.95 billion) and a €960.1 million
($1.1 billion) equity investment from Gilead.
We identified the following three performance obligations as part of this collaboration:
(i) the transfer of an extended license on ziritaxestat (GLPG1690) (this performance
obligation was satisfied completely in 2019), (ii) the granting of exclusive access to our
drug discovery platform (i.e. the IP, technology, expertise and capabilities) during the
collaboration period and exclusive option rights on our current and future clinical
programs after Phase 2 (or, in certain circumstances, the first Phase 3 study) outside
Europe and (iii) an increased cost share from 20/80 to 50/50 on the global development
activities of filgotinib, as a result of the revised license and collaboration agreement.
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In the years thereafter (2020-2023), the collaboration agreement relating to filgotinib was
restated several times (see further in this chapter).
We however retain the following performance obligations: (i) 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 (ii) an increased cost share from 20/80 to 50/50 to 100/0 (for certain
agreed activities ("Group A activities", as defined below)) until the end of the third quarter
of 2023, and to 100/0 since then of the costs of the global development activities of
filgotinib going forward.
This second performance obligation was transferred to Alfasigma on 31 January 2024,
when we closed the transaction for the transfer of the Jyseleca® business to Alfasigma
and the (amended and restated) collaboration agreement relating to filgotinib was
assigned to Alfasigma as a consequence thereof.
Terms of the collaboration relating to our drug discovery platform
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.
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
Since the revised agreement of December 2020, we assumed all development,
manufacturing, commercialization and certain other rights for filgotinib in Europe. Since
1 January 2021, we bear the full future development costs for certain studies (defined
as "Group A activities"), in lieu of the equal cost split contemplated by the previous
agreement. The 50/50 global development cost sharing arrangement continued for
certain other studies. 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 all the amendments to the
existing arrangement for the commercialization and development of filgotinib, Gilead
paid us €172.6 million in total in previous years.
Since the amendment of December 2020, we are also no longer eligible to receive any
future milestone payments relating to filgotinib in Europe. Other terms of the original
license agreement remained in effect.
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On 30 October 2023, we and Gilead agreed to amend the filgotinib agreement by
terminating the existing 50/50 global development cost sharing arrangement with us
bearing the costs going forward, and to terminate our obligation to pay tiered royalties
to Gilead on net sales of Jyseleca® in Europe, in addition to other amendments.
Effective 31 January 2024, following the closing of the transaction between us and
Alfasigma for the transfer of the Jyseleca® business, we assigned our rights and
obligations under the filgotinib collaboration to Alfasigma, except for our right to receive
royalties from Gilead on net sales in the Gilead Territory under a separate agreement
between Gilead and us entered into in October 2023.
Gilead remains responsible for commercial activities outside of Europe.
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. 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. On 6 November 2019, Gilead exercised warrant A and increased its
ownership in Galapagos to 25.10% of the then 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. On 31 December 2023 the value of the subsequent
Warrant B decreased to €0.05 million, driven by the decrease of our share price, and of
the implied volatility in 2023.
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. Gilead’s ownership amounted to 25.35% at 31 December 2023.
Since 22 October 2019, Gilead has two representatives on the Board of Directors of
Galapagos (Daniel O’Day and Linda Higgins).
Evolution of the total transaction price
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
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FINANCIAL STATEMENTS
delivered. Milestone payments are included in the transaction price of the arrangement
to the extent that it is highly probable that a significant reversal of revenue will not occur.
Milestone payments received from Gilead are recognized in revenue over time till the end
of the development plan. Sales based milestones and sales based royalties are also part
of the arrangement and are recognized as revenues at a point in time at the moment
they occur.
The €4.0 billion upfront consideration per 31 December 2022 originates from our initial
collaboration for filgotinib from 2015 (€275.6 million), €3.6 billion from the initial
allocation of the total upfront consideration received through the 2019 collaboration
(see beginning of this section) and €172.6 million resulting from amendments to our
filgotinib collaboration in 2020 (€160.0 million) and to the DIVERSITY study in 2021
(€12.6 million). We refer to our previous years financial statements for more detailed
information.
The below table summarizes the changes in the transaction price during 2023 of our
collaboration with Gilead:
(thousands of €)
Upfront consideration
Milestones achieved
Royalties
Impact initial valuation of share subscription agreement
31 December 2022
Other movements
in 2023
31 December 2023
4,018,016
212,601
30,710
124,604
9,466
4,018,016
212,601
40,176
124,604
4,385,931
9,466
4,395,397
Less:
Warrant issuance liabilities
Warrant A
Initial warrant B
Subsequent warrant B
Allocation to performance obligations
Ziritaxestat (terminated)
Filgotinib (discontinued operations)(1)
Drug discovery platform (10 years)
(43,311)
(2,545)
(728)
4,339,347
666,967
1,372,178
2,300,203
(43,311)
(2,545)
(54)
4,349,487
666,967
1,381,644
2,300,876
674
10,140
9,466
674
(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 €58.7 million on 31 December 2022 and to €39.8 million on 31 December 2023.
Transfer of drug discovery and research activities in
Romainville (France) to NovAliX
Effective as from 1 July 2023 we transferred our drug discovery and research activities
in Romainville and employees exclusively dedicated to the operation of these activities
to NovAliX, who assumes all ongoing research and discovery activities in Romainville. In
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FINANCIAL STATEMENTS
return, we are committed to utilizing the research capabilities and expertise of NovAliX
through a five year-collaboration and within the context of our R&D portfolio during
which we are committed to purchase for a total of €73.8 million services from NovAliX. We
made an upfront payment amounting to €8.3 million at closing of the transaction which
will be released over the five year-period. The loss realized on disposal, on closing of the
transaction, was capitalized as an advance and will gradually be released through our
income statement in accordance with the progress of our future purchase commitment.
We refer to note 28 for more details on this transaction.
3. Material accounting policies
Our material 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.
The consolidated financial statements are presented in Euros, which is also our
functional currency. Amounts are rounded to the nearest thousand, unless otherwise
stated.
Reclassification of accrued interests on financial
investments – comparative periods not restated
Accrued interests on financial investments were in the past recorded on the “current
financial investments” line for treasury bills while reported on a separate current assets/
current liabilities line for the other financial investments measured at amortized cost
(mainly term deposits).
During the third quarter of 2023 we decided to align the presentation of all our financial
investments at amortized cost and present all accrued interests as part of the amortized
investments” line / "cash and cash
cost measurement on the “current financial
equivalents" line.
As the impact of this classification misstatement on the prior period comparative
numbers was deemed immaterial for all comparative periods presented, we did not
restate the prior period financial statements. This is in accordance with IAS 8.42 that
requires to only adjust the comparatives for material prior period errors.
The impact of this error on 31 December 2022 amounted to €9.9 million net positive
accrued interests mainly related to accrued positive interests on current financial
investments that would have increased our “current financial investments” and “cash
and cash equivalents” line and decreased our “other current assets” line by the same
amount.
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FINANCIAL STATEMENTS
Discontinued operations presentation – comparative
periods restated
Our income statements and statements of comprehensive income of the comparative
periods presented in these financial statements have been restated to present the
activities related to the Jyseleca® business on a separate line “Net income/loss (-) from
discontinued operations, net of tax”.
We refer to note 5 for more detailed information on these discontinued operations.
New standards and interpretations applicable for the annual
period beginning on 1 January 2023
New standards and interpretations applicable for the annual period beginning on
1 January 2023 did not have a material impact on our consolidated financial statements
except for the application of the amendments made to IAS 1 Disclosure of Accounting
Policies. As a result of this amendment, we reassessed our accounting policies in order
to remain with only the material accounting policies.
Standards and interpretations published, but not yet
applicable for the annual period beginning on 1 January
2023
A number of new standards are effective for annual periods beginning on or after
1 January 2024 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 2024:
Liability in a Sale and leaseback (Amendments to IFRS 16);
Classification of liabilities as current or non-current (Amendment to IAS 1);
Non-current liabilities with covenants (Amendment to IAS 1);
Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).
The following amendments are effective for the period beginning 1 January 2025:
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability
Business combinations
Business combinations are accounted for using the acquisition method. In the statement
of financial position, all
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
identifiable assets,
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FINANCIAL STATEMENTS
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.
Any contingent consideration to be transferred by us in relation to businesses acquired
are linked to milestone payments 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 on the line “other financial expenses”.
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 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
transferred and the fair value of
Subsequently, goodwill is stated at cost less impairments.
is initially measured as the excess of the total purchase consideration
the acquired assets and assumed liabilities.
As goodwill is considered to have an indefinite life, it is tested for impairment at least
once a year (at each year-end), and whenever there is an indication that it may be
impaired, by comparing its carrying amount with its recoverable amount.
Any impairment costs are recorded in our consolidated income statement on the line
“Other operating income/expense”.
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
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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
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.
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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 and databases
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 only include success fees that were capitalized in relation to the Gilead
agreement of 2019. These costs are currently amortized on a straight-line basis over a
period of 10 years, reflecting the term of our collaboration with Gilead.
We review at each balance sheet date the carrying amount of our 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.
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:
Buildings: 33 years
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.
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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.
We review at each balance sheet date the carrying amount of our property, plant and
equipment 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).
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 incremental borrowing rate . Our lease
payments generally only include fixed payments and extension option payments if we
are reasonably certain to exercise this option.
After initial recognition, the lease liability is measured at amortized cost using the
rate determined at commencement and will be re-measured (with a
discount
corresponding adjustment to the related right-of-use asset) when there is a change in
future lease payments, generally 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, less any lease incentives received from the lessors.
After initial recognition, the right-of-use assets are measured at cost and generally
depreciated over 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.
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.
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
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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.
(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;
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.
(a) Financial assets at fair value through profit or loss
Financial assets are designated at fair value through profit or loss if we manage such
investments and make purchase and sale decisions based on their fair value in
accordance with the investment strategy. Attributable transaction costs are recognized in
profit or loss as incurred. Financial assets at fair value through profit or loss are measured
at fair value, and changes therein, which take into account any dividend income, are
recognized in profit or loss.
Equity instruments
We hold investments in equity instruments, which based on IFRS 9, are designated as
financial assets at fair value through profit or loss. The fair value of listed investments
is based upon the closing price of such securities on Euronext at each reporting date. If
there is no active market for an equity instrument, we establish the fair value by using
valuation techniques.
Current financial investments measured at fair value through profit or loss
Current financial investments include financial assets measured at fair value through
profit or loss and may comprise short term bond funds that have a maturity equal or less
than 12 months, and money market funds.
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Cash equivalents measured at fair value through profit or loss
Cash equivalents measured at fair value through profit or loss may comprise bonds
and money market funds that are readily convertible to cash and are subject to an
insignificant risk of changes in value.
(b) Financial assets at amortized cost
Receivables
Receivables are designated as financial assets measured at amortized cost. They are
initially measured either at fair value or at transaction price,
in the absence of a
significant financing component.
All receivables are subsequently measured in the balance sheet at amortized cost, which
generally corresponds to nominal value less expected credit loss provision.
Receivables mainly comprise trade and other receivables and current/non-current R&D
incentives receivables.
The R&D incentives receivables relate to refunds resulting from R&D incentives on
research and development expenses in France and Belgium. This is a grant receivable
that is based on annual declarations and is only refunded in case it cannot be offset by
a tax payable. Research and development incentives receivables are discounted over the
period until maturity date according to the appropriate discount rates. We refer to the
accounting policy on grants and R&D incentives.
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
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 term deposits that are readily convertible to cash within three months or
less, that are subject to an insignificant risk of changes in their value and that are held
for the purpose of meeting short-term cash commitments.
Cash and cash equivalents exclude restricted cash, which is presented in the line other
non-current assets in the statement of financial position.
Impairment
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
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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) 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 or
at fair value.
Financial
liabilities.
liabilities measured at amortized cost mainly comprise trade and other
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.
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.
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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, which are reported as “Product net
sales” on the discontinued operations line 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:
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
In some cases our
development services and/or cost sharing mechanisms.
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.
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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
in the amount of cumulative revenue
highly probable that a significant reversal
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
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.
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(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).
Product net sales
Revenue on the sale of Jyseleca® is recorded as “Product net sales” on the discontinued
operations line 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.
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Cost of sales
Our cost of sales includes primarily the purchase cost of the goods sold and
transportation costs.
Other operating income
Grants and R&D incentives
As we carry out extensive research and development activities, we benefit from various
grants and R&D incentives from certain governmental agencies. These grants and R&D
incentives generally aim to partly reimburse (approved) expenditures incurred in our
research and development efforts and are credited to the income statement, under
other income, when the relevant expenditure has been incurred and there is reasonable
assurance that the grants or R&D incentives are receivable.
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.
Segment reporting
We currently have one operating and reportable segment.
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Assets held for sale and discontinued operations
A discontinued operation is a component of an entity that either has been disposed of,
or that is classified as held for sale. It must either: represent a major separate line of
business or geographical area of operations; be part of a single coordinated disposal
plan; or be a subsidiary acquired exclusively with a view to resale.
Intercompany transactions between continuing and discontinued operations are
eliminated against discontinuing operations.
Non-current assets and disposal groups are classified as assets held for sale if their
carrying amount is to be recovered principally through a sale transaction rather than
through continuing use. This condition is regarded as met only when the sale is highly
probable and the asset (or disposal group) is available for immediate sale in its present
condition. A transaction is assumed to be highly probable if there are no significant
risks of completion of the transaction, which depends on the specific circumstances but
usually required at least an agreed binding term sheet.
They are stated at the lower of carrying amount and fair value less costs to sell with any
resulting impairment recognized. Assets related to discontinued operations and assets
of disposal group held for sale are not depreciated.
On 30 October 2023, we signed a letter of intent to transfer our Jyseleca® business to
Alfasigma and the final agreement was signed on 30 December 2023. We classified the
assets and the associated liabilities of the Jyseleca® business as held for sale in our
financial statements for the year ended 31 December 2023. The transaction was closed
on 31 January 2024.
Where applicable and in accordance with IFRS 5, we have restated the 2022
comparatives in the consolidated income statement and in the notes to reflect the
impact of classifying the Jyseleca® business as discontinued operations in 2023.
We refer to note 5 of our consolidated financial statements.
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4. Critical accounting judgments and key sources of
estimation uncertainty
In the application of the accounting policies, we are required to make judgments,
estimates and assumptions about the carrying amounts of assets and liabilities that
are not readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be relevant.
Actual results may differ from these estimates.
Our estimates and assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the
revision affects only that period or in the period of the revisions and future periods if the
revision affects both current and future periods.
The following are the critical judgments that we have made in the process of applying
the accounting policies and the key sources of estimation uncertainty that have the most
significant effect on the amounts recognized in the consolidated financial statements
presented elsewhere in this annual report.
Critical judgments in applying accounting policies
IFRS 15 – Revenue recognition of the collaboration with Gilead for the
development of filgotinib (reported within the results from discontinued
operations)
Our critical judgments were as follows:
Identification of the contract
Despite the recent additional amendment to the collaboration with Gilead for the
development of filgotinib (reference is made to note 2), 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 recent modifications to the collaboration with Gilead (reference is made to note
2) 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. Based on this, the contract modification has
been treated on a cumulative catch-up basis under IFRS 15.
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Allocation of the total transaction price
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
If we would have concluded that the increased
this performance obligation.
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 our 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 and the expected closing of the
transaction with Alfasigma. As a result of this transaction, the contract with Gilead
relating to filgotinib will be transferred to Alfasigma and we will be released from our
performance obligation. The remaining costs per 31 December 2023 mainly reflect
the costs that we still estimate to incur before the transfer to Alfasigma.
IFRS 5 – Classification of group of assets/liabilities held for sale (disposal group)
and discontinued operations
Management determined that selling the Jyseleca® business represents a
“discontinued operation” in accordance with IFRS 5. We assessed that the Jyseleca®
business represents a component of the group for which the related operations and
cashflows could be distinguished from the rest of the entity. Jyseleca® is our only
commercialized product and represents a major line of business.
Management assessed that, at the reporting date, the sale of the Jyseleca® business
to Alfasigma was highly probable. A letter of intent was signed on 30 October 2023
and included a customary break-up fee in the event that the parties would not
proceed with definitive agreements (share and asset purchase agreement and
transition agreement). These definitive agreements were signed on 30 December
2023 and only included usual and customary closing conditions. Based on this, we
assessed that the sale was highly probable and classified the disposal group as held
for sale per 31 December 2023.
Our inventories were not considered to be part of the disposal group held for sale.
The inventories will not transfer to Alfasigma on closing of the sale transaction but
will gradually be transferred to Alfasigma over the coming years. In the meantime, we
will bear all risks related to these inventories.
We refer to note 5 for more information about the discontinued operations and disposal
group held for sale.
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 2023.
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FINANCIAL STATEMENTS
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 and the expected
closing date of the transfer of the Jyseleca® business to Alfasigma, 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. Our
total deferred income balance related to this filgotinib performance obligation amounts
to €26.3 million on 31 December 2023 and will mainly be released to revenue from
discontinued operations in the first quarter of 2024 as a result of the completion of the
sale of the Jyseleca® business to Alfasigma on 31 January 2024. The sale to Alfasigma
includes the transfer of the amended filgotinib agreement, and by consequence marks
the end of our performance obligation towards Gilead. At reporting date, had our best
estimate of the remaining cost to complete the filgotinib performance obligation been
increased by 10%, this would have resulted in a decrease in revenue recognition in 2023
of €2.6 million and a corresponding increase in current deferred income. Had our best
estimate of the remaining cost to complete the filgotinib performance obligation been
decreased by 10%, this would have resulted in an increase in revenue recognition in 2023
of €2.6 million and a corresponding decrease in current deferred income.
We refer to note 5 for more information about the results from discontinued operations.
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) that cover a period of 17 years and
an appropriate discount rate is required to calculate present values, a process which
involves estimates. Given that the calculation contains cashflows that go beyond the
5-years horizon it becomes less verifiable and more assumptions are used. Unexpected
events, inherent in the business, can cause that results are completely different than the
ones predicted. These 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 2023 is €69.6 million.
We refer to note 13 for more information about the goodwill and impairment of
goodwill.
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 and is updated at each
reporting date. The carrying amount at 31 December 2023 amounts to €21.0 million.
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
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FINANCIAL STATEMENTS
are reviewed at each reporting date and any changes are reflected in our consolidated
income statement.
We refer to note 25 for more information about the contingent consideration payable for
the acquisition of CellPoint.
5. Discontinued operations and assets held for sale
On 30 October 2023 we announced that we had signed a letter of intent contemplating
a transfer of the Jyseleca® business to Alfasigma, including the European and UK
Marketing Authorizations, the commercial, medical and development activities for
Jyseleca® and approximately 400 positions in 14 European countries.
On 30 December 2023 we signed a final share and asset purchase agreement with
Alfasigma.
On 31 December 2023, the transaction was still subject to certain closing conditions
such as the finalization of the consultation process with the workers councils and FDI
clearance in Italy, France and Denmark. The transaction was closed on 31 January 2024,
upon obtaining all necessary approvals. We received a €50.0 million upfront payment
in 2024, and are entitled to potential sales-based milestone payments totalling
€120.0 million and mid-single to mid-double-digit royalties on European sales. We will
contribute up to €40.0 million to Alfasigma by June 2025 for Jyseleca® related
development activities.
On 31 January 2024, we also signed a transition agreement with Alfasigma enacting
the responsibilities and services that will be provided by the parties during a transition
period for the transfer of the business. The gradual transfer of our remaining inventories
to Alfasigma is also governed by this contract.
The transfer of our Jyseleca® business has been determined to meet the criteria to be
classified as held for sale and discontinued operations in our financial statements for the
year ended 31 December 2023.
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The post-tax result from discontinued operations can be disaggregated in the following
items:
(i) Financial performance
(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
Year ended 31 December
2023
112,339
431,465
543,804
(18,022)
(190,177)
(113,356)
(17,989)
13,003
2022
87,599
176,432
264,031
(12,079)
(245,286)
(144,075)
(9,776)
10,721
Operating profit/loss (-)
217,262
(136,464)
Fair value adjustments and net currency exchange differences
Other financial income
Other financial expenses
(13)
679
(167)
(25)
15
(7,825)
Profit /loss (-) before taxes
217,761
(144,298)
Income taxes
Net profit/loss (-)
Basic and diluted earnings/loss (-) 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)
(2,076)
(2,272)
215,685
(146,570)
3.27
(2.23)
65,884
65,699
65,933
65,699
Jyseleca® product net sales in Europe amounted to €112.3 million in 2023, compared to
€87.6 million in 2022, of which €8.1 million realized in Belgium (€7.3 million in 2022).
Collaboration revenues in discontinued operations related to revenue recognition of
the collaboration agreement with Gilead for the filgotinib development amount to
€429.4 million in 2023 compared to €174.4 million last year.
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Effective 31 January 2024, following the closing of the transaction between us and
Alfasigma to transfer the Jyseleca® business to Alfasigma, we assigned our rights and
obligations under the filgotinib collaboration with Gilead to Alfasigma, except for our
right to receive royalties from Gilead on net sales in the Gilead Territory under a separate
agreement between Gilead and us entered into in October 2023. As a consequence, our
performance obligation towards Gilead for the development of filgotinib will come to
its end, and the total estimated remaining costs to complete the filgotinib development
was substantially reduced leading to a major increase in the percentage of completion of
our performance obligation (applying the “cost-to-cost” input model) and a considerable
positive catch-up of revenue explaining the increase in revenue recognition for the year
2023 compared to 2022.
We refer to note 2 for a general description of our collaboration with Gilead.
On 31 December 2023, the remaining deferred income related to the filgotinib
development amounts to €26.3 million which will mainly be released in revenue in 2024.
The following major classes of assets and liabilities relating to these operations have
been classified as held for sale in the consolidated statement of financial position on
31 December 2023:
(ii) Assets and liabilities held for sale
(thousands of €)
Property, plant and equipment
Deferred tax assets
Other non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Other current assets
Total assets in disposal group classified as held for sale
Retirement benefit liabilities
Non-current lease liabilities
Other non-current liabilities
Current lease liabilities
Trade and other liabilities
Current tax payable
Current deferred income
Total liabilities directly associated with assets in disposal group classified as held for sale
Net liability held for sale
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Galapagos NV Annual Report 2023
31 December
2023
4,194
292
598
737
15,786
7
471
22,085
1,160
2,327
329
1,308
25,619
1,242
59
32,044
(9,959)
FINANCIAL STATEMENTS
This disposal group mainly contains all assets and liabilities of the Galapagos
subsidiaries that were fully dedicated to the Jyseleca® business and that will be
transferred to Alfasigma in the current transaction. The divestiture includes 100% of
the shares of the following subsidiaries, including most of the employees: Galapagos
Biotech Limited (UK), Galapagos Biopharma Belgium BV, Galapagos Biopharma GmbH,
Galapagos Biopharma Italy S.r.l., Galapagos Biopharma Netherlands B.V., Galapagos
Biopharma Spain S.L.U., Galapagos Biopharma Denmark ApS, Galapagos Biopharma
Sweden AB, Galapagos Biopharma Finland Oy, Galapagos Biopharma Ireland Ltd.,
Galapagos Biopharma Norway AS, Galapagos Biopharma Austria GmbH. In addition, and
as part of the same transaction, we will transfer all assets, liabilities and employees
directly related to the Jyseleca® business but belonging to Galapagos NV or other
Galapagos subsidiaries, of which the main asset is the worldwide IP relating to Jyseleca®.
Our inventories were not considered as part of the disposal group as these did not
transfer to Alfasigma on closing of the transaction on 31 January 2024 but will gradually
transfer to Alfasigma during the coming years and we will bear the risks associated with
it as long as it is not transferred.
Held for sale assets are stated at their carrying amount, which is lower than the fair value
less costs to sell. We concluded that the expected present value of the purchase price to
be obtained from Alfasigma for the sale of the Jyseleca® business approximates the fair
value less costs to sell of the disposal group.
(iii) Cash flow from discontinued operations
(thousands of €)
Net cash flow used in operating activities
Net cash flow used in investing activities
Net cash flow used in financing activities
Net cash flow used in discontinued operations
2023
2022
(175,627)
(191,095)
(105)
(1,928)
(136)
(1,841)
(177,660)
(193,072)
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FINANCIAL STATEMENTS
6. Segment information
We are currently operating as a single operating segment.
Geographical information
In 2022 and 2023 our continuing operations were mainly located in Belgium, France, the
Netherlands, Switzerland and the United States. The revenues from our collaboration
partner Gilead represented nearly 100% of our total net revenues from continuing
operations in 2023 (99.9% in 2022).
Following table summarizes our net revenues by destination of customer:
(thousands of €)
United States of America
Europe
Total net revenues
minus:
United States of America
Europe
Total net revenues from discontinued operations
United States of America
Europe
Total net revenues from continuing operations
Year ended 31 December
2023
665,174
118,354
783,528
425,466
118,338
543,804
239,708
16
239,724
2022
414,129
91,151
505,280
172,980
91,051
264,031
241,149
100
241,249
On 31 December 2023, we held €323.8 million (€370.4 million in 2022) 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
2023
56,209
1,438
251,230
3,247
-
11,660
-
323,784
2022
72,087
20,397
255,461
4,962
3,037
12,729
1,747
370,420
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FINANCIAL STATEMENTS
7. Total net revenues from our continuing operations
Collaboration revenues
The following table summarizes our collaboration revenues for the years ended
31 December 2023 and 2022 by collaboration and by category of revenue: upfront
payments and license fees, reimbursement income and royalties.
Year ended 31 December
Over time
Point in
time
(thousands of €)
Recognition of non-refundable upfront
payments and license fees
Gilead collaboration agreement for drug
discovery platform
Reimbursement income
Novartis collaboration agreement for MOR106
Royalties
Gilead royalties on Jyseleca®
Other royalties
2023
2022(*)
230,242
230,423
230,242
230,423
-
-
9,482
9,466
16
56
56
10,770
10,726
44
Total collaboration revenues
239,724
241,249
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
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
€230.2 million in revenue in 2023. We expect to recognize the same amount in the
coming years, until the end of the 10-year period.
Since signing of the letter of intent with Alfasigma in October 2023, we classified all
activities that were directly related to the Jyseleca® business, including the revenue
recognition related to the filgotinib performance obligation, as discontinued operations
in accordance with IFRS 5. We refer to note 5 “Discontinued Operations” for additional
information.
For the year ended 31 December 2023 we also recognized in revenue €9.5 million of
royalties from Gilead on filgotinib. The royalties on sales of Jyseleca® performed by
Gilead in Japan were not reported as discontinued operations as we still have the right
to receive those royalties on future sales made by Gilead and its commercialization
partners (this right is not subject to transfer to Alfasigma as part of the transfer of the
Jyseleca® business to them).
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FINANCIAL STATEMENTS
Collaboration with Gilead
We refer to note 2 of this financial report for a general description of our collaboration
with Gilead.
In addition, we concluded as follows for the remaining performance obligations:
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 2023.
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FINANCIAL STATEMENTS
8. 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 2023 and 2022.
(thousands of €)
Personnel costs
Subcontracting
Disposables and lab fees and premises costs
Depreciation and impairment
Professional fees
Other operating expenses
Year ended 31 December
2023
(95,788)
(82,997)
(18,083)
(22,254)
(9,272)
(12,900)
2022(*)
(115,484)
(61,192)
(19,529)
(51,493)
(9,316)
(12,783)
Total research and development expenditure
(241,294)
(269,797)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
The table below summarizes our research and development expenditure for the years
ended 31 December 2023 and 2022, broken down by program:
(thousands of €)
SIKi program
TYK2 program on GLPG3667
CAR-T programs in oncology
Other programs
Total research and development expenditure
Year ended 31 December
2023
(18,900)
(31,289)
(82,218)
(108,887)
(241,294)
2022(*)
(47,727)
(24,467)
(29,999)
(167,603)
(269,797)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
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FINANCIAL STATEMENTS
Sales and marketing expenses
The following table summarizes the sales and marketing expenses of our continuing
operations for the years ended 31 December 2023 and 2022.
(thousands of €)
Personnel costs
Depreciation
External outsourcing costs
Professional fees
Other operating expenses
Total sales and marketing expenses
Year ended 31 December
2023
(2,997)
(113)
(1,776)
(131)
(659)
(5,676)
2022(*)
(1,693)
(59)
(1,267)
(99)
(363)
(3,480)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
General and administrative expenses
The following table summarizes the general and administrative expenses for the years
ended 31 December 2023 and 2022.
(thousands of €)
Personnel costs
Depreciation and impairment
Legal and professional fees
Other operating expenses
Year ended 31 December
2023
(66,098)
(15,978)
(23,250)
(22,963)
2022(*)
(76,536)
(8,529)
(23,715)
(26,375)
Total general and administrative expenses
(128,289)
(135,155)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
Other operating income
The following table summarizes other operating income for
31 December 2023 and 2022.
the years ended
(thousands of €)
Grant income
R&D incentives income
Other
Total other operating income
Year ended 31 December
2023
6,618
32,968
7,686
47,272
2022(*)
1,873
29,104
5,150
36,127
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
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FINANCIAL STATEMENTS
The grant income in 2023 and 2022 was fully related to grants from a Flemish agency
and the Belgian government. In many cases these grant agreements carry clauses which
require us to maintain a presence in the same region for a number of years and invest
according to pre-agreed budgets. Grant income in 2023 also included a grant of
€6.1 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:
(thousands of €)
Income from innovation incentive system in France
Income from Belgian R&D incentives
Tax rebates on payroll withholding taxes of R&D personnel (Belgium & the
Netherlands)
Total R&D incentives income
Year ended 31 December
2023
5,881
16,535
10,552
32,968
2022(*)
11,075
10,339
7,689
29,104
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
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FINANCIAL STATEMENTS
9. Staff costs
The table below summarizes the number of employees of our continuing operations on
31 December 2023 and 2022:
Number of employees on 31 December
Total
2023
646
646
2022
724
724
The average number of FTE’s of our continuing operations during the years 2023 and
2022 was:
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
Year ended 31 December
2023
2022
4
372
13
245
634
Year ended 31 December
2023
(100,250)
(15,742)
(5,581)
(36,628)
(6,682)
4
434
7
250
695
2022(*)
(99,708)
(16,748)
(5,583)
(62,003)
(9,670)
(164,883)
(193,712)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
Reference is made to note 31 “Share-based payments” for more information on our
subscription right plans.
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FINANCIAL STATEMENTS
10. Fair value adjustments, net currency exchange
differences and other financial income/expenses
The following table summarizes fair value adjustments and net currency exchange
differences, and other financial income and expenses for the years ended 31 December
2023 and 2022.
(thousands of €)
Fair value adjustments and net currency exchange differences:
Net unrealized currency exchange gain/loss (-)
Net realized currency exchange gain/loss (-)
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
Discounting effect of other non-current liabilities
Other finance income
Total other financial income
Other financial expenses:
Interest expenses
Discounting effect of other non-current liabilities
Other finance charges
Total other financial expenses
Year ended 31 December
2023
2022(*)
(20,544)
(1,118)
18
(390)
38,286
16,252
41,559
2,825
186
-
6,929
51,498
79,290
18,094
617
318
24
93
-
376
80,249
18,563
(1,770)
-
(843)
(2,613)
(6,884)
(2,271)
(699)
(9,854)
Total net financial result
93,888
60,206
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
The net currency unrealized exchange loss in 2023 of €20.5 million primarily consisted of
an unrealized exchange loss of €20.4 million on cash and cash equivalents and current
financial
investments at amortized cost held in U.S. dollars, as compared to an
unrealized exchange gain in 2022 of €41.3 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.
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FINANCIAL STATEMENTS
The fair value gain on the current financial investments in 2023 reflected the exchange
differences on the money market funds, the interest on these money market funds
and the effect of the re-measurement at fair value of our money market funds on
31 December 2023. These re-measurement gains were mainly the result of the positive
returns on the EUR denominated money market funds.
Interest income was related to interests on treasury bills, term deposits and notice
accounts. Net interest income increased due to increasing interest rates.
Interest expenses were related to interests on term deposits, treasury bills and on leases
of buildings and cars. Other financial expense for 2022 also comprise the discounting
effect of other non-current liabilities as deferred consideration and milestones payables
related to the acquisition of subsidiaries.
11. Income taxes
The following table summarizes the income taxes recognized in profit or loss for the
years ended 31 December 2023 and 2022.
(thousands of €)
Current tax
Deferred tax
Total income taxes
Year ended 31 December
2023
(5,928)
(3,685)
(9,613)
2022(*)
(1,738)
1,166
(572)
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
Current tax, consisting of corporate income taxes, and deferred tax income/cost (–)
related to subsidiaries of our continuing operations working on a cost plus basis. The
increase in 2023 as compared to 2022 was primarily due to the re-assessment of net
deferred tax liabilities and corporate income tax payables as a result of a one-off
intercompany transaction.
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FINANCIAL STATEMENTS
Taxes recognized in profit or loss
For the purpose of the disclosure below corporate tax was calculated at 25% (2022:
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.
Year ended 31 December
(thousands of €)
Profit /loss (-) before taxes
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 income
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 IID
Total explanations
2023
5,625
1,406
9,613
8,207
(94)
(6,752)
9,157
(5)
1,549
(81)
(267)
(722)
34,339
1,062
(29,979)
8,207
2022(*)
(70,849)
(17,712)
572
18,284
(337)
(5,828)
15,501
(146)
2,975
(1,677)
-
1,101
4,819
1,877
-
18,284
(*) The 2022 comparative has been restated to reflect the impact of classifying the Jyseleca® business as discontinued operations in 2023.
Non-taxable income for the years ended 31 December 2023 and 2022 were related to
non-taxable grants and tax credits.
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FINANCIAL STATEMENTS
12. Earnings/loss (–) per share
Year ended 31 December
2023
2022
Net profit/loss (-) attributable to owners of the parent (thousands of €)
211,697
(217,991)
Number of shares (thousands)
Weighted average number of shares for the purpose of basic earnings / loss
(-) per share
65,884
65,699
Basic earnings/loss (-) per share (€)
3.21
(3.32)
Net profit/loss (-) attributable to owners of the parent (thousands of €)
211,697
(217,991)
Number of shares (thousands)
Weighted average number of shares for the purpose of diluted earnings /
loss (-) per share
Number of dilutive potential ordinary shares
65,884
49
65,699
-
Diluted earnings/loss (-) per share (€)
3.21
(3.32)
As we reported a net loss in 2022, 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.
Reference is also made to note 2 where an explanation is provided about the terms and
conditions of the outstanding Gilead Warrant B that can, potentially, be exercised by
Gilead and lead to a dilutive effect. Due to the exercise price mechanism of the Gilead
Warrant B, this warrant was out-of-the-money for all years presented.
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FINANCIAL STATEMENTS
13. Goodwill and impairment of goodwill
(thousands of €)
On 1 January 2022
Recognized on acquisition of subsidiaries
Exchange differences on goodwill
On 31 December 2022
Exchange differences on goodwill
On 31 December 2023
Goodwill
-
69,893
(80)
69,813
(256)
69,557
The goodwill resulting from both the acquisition of CellPoint (€62.4 million) and
AboundBio (€7.1 million) was allocated to the same cash-generating unit (CGU), “CAR-T/
Cell Therapy” (which was the same as "oncology" before). 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 “CAR-T/Cell Therapy”
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 17 years (in accordance with management's
assumptions on patent protection of the underlying assets). The period considered
exceeds five years because the main sales are expected for the period beyond 2029.
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. Probabilities of success are continuously
evaluated in light of the progress of our portfolio.
Terminal growth rate of –50% reflecting the anticipated sales evolution beyond 2040
Discount rate of 13.72% (12.5% on 31 December 2022)
Future revenue and investment assumptions are based on management estimate
of the overall cell therapy market, consistent with the assumptions that a market
participant would make. Estimates about sales volumes and prices were verified
against several external databases.
No impairment was identified per 31 December 2023.
Reference is made to note 27 “Business combinations during the prior period” for a
detailed description of both business combinations.
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14. Intangible assets other than goodwill
(thousands of €)
Acquisition value
On 1 January 2022
Impact of acquisitions of
businesses
Additions
Sales and disposals
Translation differences
On 31 December 2022
Additions
Sales and disposals
Translation differences
On 31 December 2023
Amortization and impairment
On 1 January 2022
Amortization
Impairment
Sales and disposals
Translation differences
On 31 December 2022
Amortization
Sales and disposals
Translation differences
On 31 December 2023
Carrying amount
On 31 December 2022
On 31 December 2023
Software &
databases
Licences, rights,
technology and
in-process R&D Exclusive rights
Contract costs
Total
24,554
39,929
-
15,384
79,868
2,610
1,126
(913)
27,377
567
(930)
27,014
11,977
4,146
(913)
15,210
4,291
(927)
18,574
32,240
8,423
(36,298)
(36)
44,258
(948)
(139)
43,171
4,199
333
35,666
(36,298)
(4)
3,896
1,426
(948)
(20)
4,354
89,720
89,720
15,384
89,720
15,384
-
6,154
6,154
11,637
3,588
1,538
5,126
1,538
17,791
6,664
124,570
9,549
(37,211)
(36)
176,740
567
(1,878)
(139)
175,290
19,765
12,171
35,666
(37,211)
(4)
30,387
18,892
(1,875)
(20)
47,384
12,167
8,440
40,362
38,817
83,566
71,929
10,258
8,720
146,354
127,906
Impact of acquisition of businesses in 2022 refers to the acquisition of CellPoint and
AboundBio. We refer to note 27 “Business combinations during the prior period”.
The exclusive rights refer to our exclusivity contract with Lonza and are depreciated until
the beginning of March 2030, in accordance with the contract.
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 2023, our balance sheet did not hold any internally generated assets
capitalized as intangible asset.
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15. Property, plant and equipment
Fully owned
(thousands of €)
Acquisition value
On 1 January 2022
Impact of acquisitions of
businesses
Additions
Sales and disposals
Reclassifications
Translation differences
On 31 December 2022
Additions
Sales and disposals
Reclassifications
Reclassifications to assets in
disposal group classified as held
for sale
Translation differences
On 31 December 2023
Depreciation and impairment
On 1 January 2022
Depreciations
Sales and disposals
Translation differences
On 31 December 2022
Depreciations
Impairment
Sales and disposals
Reclassifications to assets in
disposal group classified as held
for sale
Translation differences
On 31 December 2023
Carrying amount
On 31 December 2022
On 31 December 2023
Land, building
and building
improvements
Installation &
machinery
Furniture,
fixtures &
vehicles
Other tangible
assets
Total
46,270
7,829
60,324
140,555
26,131
29
914
(2,846)
64,286
205
88,719
6,754
(4,403)
95
(739)
279
90,705
5,505
4,433
(2,173)
49
7,814
4,603
2,117
5,688
(600)
3,580
(15)
57,040
6,472
(24,057)
272
(49)
39,678
24,749
4,336
(574)
(1)
28,510
4,355
108
3,438
(1,344)
167
43
10,241
268
(1,067)
124
(249)
36
9,353
4,582
1,265
(1,328)
18
4,537
1,290
(1,194)
(13,676)
(827)
(161)
156
11,218
(11)
19,178
(129)
19
4,891
19,296
(68,033)
11,587
3,329
(7,655)
(491)
6,770
-
-
7,645
(7,645)
-
2,254
29,336
(4,790)
-
233
167,588
16,823
(37,182)
-
(988)
266
146,507
34,837
10,034
(4,075)
66
40,862
10,248
7,645
(23,342)
(290)
164
35,287
80,905
79,487
28,530
20,500
5,704
4,463
11,587
6,770
126,726
111,220
The sales and disposals of 2023 mainly relate to the transaction with NovAlix. We refer to
note 28 “Details of the NovAlix transaction” for more information.
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. In
2023 we recorded an impairment of €7.6 million on the construction project in Mechelen
(Belgium), following a re-assessment of the project.
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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.
Right-of-use
(thousands of €)
Acquisition value
On 1 January 2022
Additions
Sales and disposals
Translation differences
On 31 December 2022
Additions
Sales and disposals
Reclassifications to assets in
disposal group classified as held for
sale
Translation differences
On 31 December 2023
Depreciation and impairment
On 1 January 2022
Depreciations
Sales and disposals
Translation differences
On 31 December 2022
Depreciations
Sales and disposals
Reclassifications to assets in
disposal group classified as held for
sale
Translation differences
On 31 December 2023
Carrying amount
On 31 December 2022
On 31 December 2023
Carrying amount
Land & building
Installation &
machinery
Furniture,
fixtures &
vehicles
37,461
703
(3,554)
224
34,834
1,726
(11,497)
(2,091)
202
23,174
12,500
4,421
(2,602)
105
14,424
3,342
(5,922)
(699)
134
11,279
20,410
11,895
593
(156)
437
(186)
251
374
134
(156)
352
57
(186)
223
85
28
10,184
3,603
(1,274)
(8)
12,505
1,724
(1,897)
(4,683)
3
7,652
3,569
3,141
(1,235)
(2)
5,473
3,450
(1,871)
(2,580)
1
4,473
7,032
3,179
Total
48,239
4,306
(4,984)
216
47,777
3,450
(13,580)
(6,774)
205
31,078
16,444
7,696
(3,993)
103
20,250
6,849
(7,979)
(3,279)
135
15,976
27,526
15,101
(thousands of €)
Property, plant and equipment fully owned
Right-of-use
Total property, plant and equipment
31 December
2023
111,220
15,101
126,321
2022
126,726
27,526
154,252
The sales and disposals of 2023 mainly relate to the transaction with NovAlix. We refer to
note 28 “Details of the NovAlix transaction” for more information.
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We refer to note 24 “Lease liabilities” for a detail of the lease liabilities related to these
right-of-use assets.
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.
16. Other non-current assets
Other non-current assets consisted of following items:
(thousands of €)
Non-current restricted cash
Financial assets held at fair value through profit or loss
Non-current portion of upfront payment to NovAlix
Non-current portion of advance related to the NovAliX transaction
Other non-current assets
Total other non-current assets
31 December
2023
5,533
13,575
4,656
5,563
318
29,645
2022
4,569
-
-
-
1,209
5,778
Financial assets held at fair value through profit or loss at 31 December 2023 consisted
of an equity instrument of a non-listed company. We have no restrictions on the sale
of this equity instrument and the asset is not pledged under any of our liabilities. The
fair value of this equity instrument was determined by reference to the initial transaction
price (classified as level 3 in the fair value hierarchy).
We refer to note 28 “Details of the NovAlix transaction” for more information related to
the upfront payment and advance.
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FINANCIAL STATEMENTS
17. Research and development incentives receivables
The table below illustrates the R&D incentives receivables related captions in the balance
sheet as at 31 December 2023, and 2022.
(thousands of €)
Non-current R&D incentives receivables
Current R&D incentives receivables
Total R&D incentives receivables
31 December
2023
141,252
37,436
178,688
2022
119,941
26,126
146,067
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 2023.
31 December 2023
Maturity date
(thousands of €)
2025
2026
2027
2028
2029 - 2031
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
11,495
11,511
5,578
28,584
17,530
19,340
20,202
19,858
35,738
112,668
29,025
30,851
25,780
19,858
35,738
141,252
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18. 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
2023
55,263
12,598
6,117
73,978
2022
39,071
5,791
8,063
52,925
Finished goods consisted in full out of Jyseleca® finished products.
19. 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
2023
17,494
738
10,217
28,449
508
14,632
15,140
43,589
2022
28,194
488
11,747
40,429
11,277
12,029
23,307
63,735
Trade and other receivables decreased primarily due to the classification to assets held
for sale for an amount of €15.8 million related to the trade and other receivables of the
commercial entities which transferred to Alfasigma on 31 January 2024. The decrease
in accrued income is due to the fact that accrued interest income on current financial
investments is now included in the line ‘current financial investments’. We refer to note 3
for more information about this reclass of accrued interests.
On 31 December 2023, we did not have any provision for expected credit losses since
we don’t have a history of credit losses and we are not aware of any forward-looking
information that could materially influence the credit risk.
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FINANCIAL STATEMENTS
20. Current financial investments
(thousands of €)
Money market funds
Treasury bills
Term deposits
Total current financial investments
31 December
2023
2022
1,316,805
1,292,514
742,025
749,835
1,458,868
1,543,596
3,517,698
3,585,945
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 Belgium, Germany, France and Europe. 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 2023, our current financial investments included $830.9 million held
in USD, which could generate a foreign currency exchange gain or loss in our financial
results in accordance with the fluctuation of the EUR/USD exchange rate as our
functional currency is EUR. 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 10 for more details about the fair value re-remeasurements and currency exchange
gains or losses recognized in our consolidated income statement.
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FINANCIAL STATEMENTS
21. Cash and cash equivalents
(thousands of €)
Cash at banks
Term deposits
Cash and cash equivalents from continuing operations
Cash and cash equivalents included in assets classified as held for sale
31 December
2023
71,803
95,000
166,803
7
2022
458,117
50,000
508,117
-
Total cash and cash equivalents
166,810
508,117
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 2023 comprised a term
deposit of €50.0 million which had an original maturity longer than three months but
was readily convertible to cash without a significant penalty, and a term deposit with an
original maturity less than three months of €45.0 million. 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 2023, our cash and cash equivalents included $34.5 million held in USD,
which could generate a foreign currency exchange gain or loss in our financial results
in accordance with the fluctuation of the EUR/USD exchange rate as our functional
currency is EUR. We refer to note 10 for more details about the currency exchange gains
or losses recognized in our consolidated income statement.
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FINANCIAL STATEMENTS
22. Share capital
(thousands of €)
On 1 January
Share capital increase
Costs of capital increase
31 December
2023
293,604
333
-
2022
292,075
1,530
-
Share capital on 31 December
293,937
293,604
Aggregate share capital
Costs of capital increase (accumulated)
Share capital on 31 December
356,445
(62,507)
293,937
356,112
(62,507)
293,604
History of share capital
The history of the share capital of Galapagos NV between 1 January 2022 and
31 December 2023 is as follows:
Date
1 January 2022
18 March 2022
20 June 2022
27 September 2022
31 December 2022
1 January 2023
20 March 2023
31 December 2023
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 €)
65,553
354,582
517
434
579
96
80
107
333
62
65,836
356,112
65,836
356,112
65,897
356,445
On 31 December 2023, Galapagos NV’s share capital amounted to €356,445 thousand,
represented by 65,897,071 shares. All shares were issued, fully paid up and of the same
class. The shares have a par value of €5.41 per share.
All of the share issuances listed above were for cash consideration.
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FINANCIAL STATEMENTS
The below table summarizes our capital increases for the years 2023 and 2022.
(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 2023
65,835,511
293,604
2,735,557
3,029,162
20 March 2023: exercise of
subscription rights
61,560
333
1,437
1,770
28.75
35.47
On 31 December 2023
65,897,071
293,937
2,736,994
3,030,931
(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.
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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 2023, an amount of €16,566,540.17 still remained available under the
general part of the authorized capital.
23. Deferred tax
Following table shows the movements in deferred tax assets and deferred tax liabilities:
Retirement
benefit liabilities
Tax loss
carryforward
Property, plant
and equipment
(thousands of €)
On 1 January 2022
Credited/charged (-) to profit or
loss
Reclassifications
Charged to other comprehensive
income/loss (-)
Translation differences
On 31 December 2022
Credited/charged (-) to profit or
loss
Reclassifications to assets in
disposal group classified as held
for sale
Charged to other comprehensive
income/loss (-)
Translation differences
On 31 December 2023
776
17
(795)
22
19
132
8
159
3,133
(1,797)
(275)
1,061
-
-
(1,061)
298
Other
122
165
(6)
281
692
Total deferred
tax assets
4,032
(1,615)
(275)
(795)
15
1,363
(72)
(292)
(292)
(6)
292
(6)
675
-
132
(4)
1,126
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FINANCIAL STATEMENTS
(thousands of €)
On 1 January 2022
Impact of acquisitions of businesses
Credited/charged (-) to profit or loss
Reclassifications
On 31 December 2022
Credited/charged (-) to profit or loss
Translation differences
On 31 December 2023
Intangible assets
other than goodwill
Other
Total deferred tax
liabilities
-
(23,265)
2,842
275
(20,148)
(1,458)
18
-
-
(2,019)
-
(23,265)
2,842
275
(20,148)
(3,477)
18
(21,588)
(2,019)
(23,607)
The unrecognized deferred tax assets on 31 December 2023 amount to €326.8 million (as
compared to €460.1 million on 31 December 2022).
The total amount of tax attributes and deductible temporary differences at 31 December
2023 amounted to €1,722.2 million (at 31 december 2022: €1,882.5 million). This is
composed of i) consolidated tax losses carried forward and deductible temporary
differences at 31 December 2023 amounting to €1,312.2 million (at 31 december 2022:
€1,516.6 million), and (ii) innovation income deduction, dividend received deduction and
investment deduction carried forward at 31 December 2023 amounting to €410.0 million
(at 31 december 2022: €365.9 million).
The available tax losses carried forward that can be offset against possible future taxable
profits amounted to €798.7 million on 31 December 2023 (€883.6 million on
31 December 2022) and can be carried forward for an indefinite period except for an
amount of €2.2 million in the United States with expiry date between 2028 and 2034. On
31 December 2023, the available tax losses carried forward in Galapagos NV (Belgium)
amounted to €757.9 million (2022: €769.9 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 2023, a carried forward tax deduction amounting to
€390.3 million (2022: €346.2 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 (2022: €1 million) and dividend received
deduction carried forward of €18.7 million (2022: €18.7 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 and 2023, 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 net
deferred tax asset was recognized as at 31 December 2023, except for our subsidiaries
operating on a cost plus basis, for which a deferred tax asset was recognized for
€1.1 million (2022: €1.1 million).
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
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FINANCIAL STATEMENTS
by considering the related recognizable deferred tax assets. We refer to note 27 for more
information on the purchase price allocation of the business combinations.
24. Lease liabilities
(thousands of €)
Lease liabilities
Within one year
In the second to fifth years inclusive
After five years
Less future finance charges
Present value of lease obligation
Less amount due for settlement within 12 months
Amount due for settlement after 12 months
Lease payments
Present value of lease payments
31 December
31 December
2023
2022
2023
2022
4,779
5,031
-
9,810
214
9,596
4,652
4,944
7,507
14,401
609
22,517
616
21,901
7,209
14,692
4,652
4,944
-
9,596
7,209
14,100
592
21,901
4,652
4,944
7,209
14,692
We refer to note 15 “Property, plant and equipment”, for details on the right of use assets.
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25. 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
2023
134,653
-
-
-
548
2022
133,298
8,485
6,222
19
651
135,201
148,675
20,972
10,598
31,570
13,582
8,226
21,808
The decrease in total trade and other liabilities can be largely explained by the payment
of deferred consideration related to the acquisition of CellPoint.
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 at
acquisition date.
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 included a discount rate of 12.5%, an appropriate probability of
success of reaching these milestones and expected timing of these milestones, in line
with the timelines and probabilities used in our impairment test of the CAR-T business.
As per 31 December 2023 changes were made to the discount rate (13.72%) and the
expected timing of the milestones. The only impact that was recognized compared to the
date of acquisition is the discounting effect. This is recognized on the line “other financial
income”. A change in probabilities of success of each milestone by 5 percentage points
would result in a change of €3.0 million in the total contingent consideration liability on
31 December 2023.
230
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
26. Deferred income
The movement in the non-current and current deferred income is detailed in the table
below.
(thousands of €)
On 1 January 2022
Of which current portion
Milestones achieved
Significant financing component(2)
Revenue recognition of upfront
Revenue recognition of milestones
Other movements
Gilead collaboration
agreement for
filgotinib
Gilead collaboration
agreement for drug
discovery platform(1)
Other deferred
income
604,875
190,018
18,238
7,672
(139,655)
(34,777)
1,759,828
229,848
-
-
(230,423)
On 31 December 2022
Of which current portion
456,352
133,470
1,529,405
230,022
Reclassification to liabilities directly
associated with assets in disposal
group classified as held for sale
Significant financing component(2)
Revenue recognition of upfront
Revenue recognition of milestones
(645)
(361,412)
(68,027)
(230,242)
Total
2,364,701
419,866
18,238
7,672
(370,078)
(34,777)
3,474
1,989,230
365,631
(60)
(645)
(591,654)
(68,027)
3,474
3,474
2,139
(60)
Other movements
(1,382)
(1,382)
On 31 December 2023
Of which current portion
26,268
25,054
1,299,163
230,070
2,032
1,146
1,327,463
256,270
(1) The upfront received and the outstanding balance at 31 December 2023 and at 31 December 2022 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 2 for a detail of the allocation of the transaction price of our
collaboration with Gilead and to note 5 and note 7 for a description of our revenue
recognition.
231
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
27. Business combinations during the prior 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.
The main reason for these acquisitions was to position ourselves in the next-generation
cancer therapy market and to significantly broaden our portfolio and capabilities. 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.
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
(thousands of €)
Book value Adjustment
Fair value Book value Adjustment
Fair value
Intangible assets other than
goodwill
-
120,517
120,517
-
4,053
4,053
Property, plant and equipment
1,289
1,289
965
Other non-current assets
Trade and other receivables
Cash and cash equivalents
Other current assets
Deferred tax liabilities
81
162
3,179
1,254
81
162
3,179
1,254
-
(22,368)
(22,368)
Trade and other liabilities
(32,789)
Current deferred income
-
(32,789)
-
4
-
4,279
536
-
(587)
(474)
965
4
-
4,279
536
(907)
(587)
(474)
(907)
Net assets acquired
(26,824)
98,149
71,325
4,723
3,146
7,869
232
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
(thousands of €)
Book value Adjustment
Fair value Book value Adjustment
Fair value
21 June 2022
CellPoint
AboundBio
Total
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
Goodwill
Exchange differences on
goodwill
Goodwill in the balance sheet at
31 December 2022
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 (in 2022)
Cash used in operating activities
for other liabilities related to the
acquisition of subsidiaries (paid
in 2022)
Cash out from acquisition of
subsidiaries (payment of
deferred consideration in 2023)
107,750
5,808
20,211
133,769
62,444
14,976
342
-
-
15,318
7,449
(80)
62,444
7,369
69,813
107,750
(3,179)
104,571
28,164
7,000
14,976
(4,279)
10,698
115,270
28,164
7,000
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.
233
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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 was attributable to
buyer specific synergies, the value of the assembled workforce and the accounting for
net deferred 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”.
234
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
28. Details of the NovAlix transaction
We completed the integrated drug discovery collaboration transaction with NovAliX on
30 June 2023, effective as from 1 July 2023. Under the terms of the agreement, our drug
discovery and research activities conducted in Romainville, France, and our employees
in Romainville, which are exclusively dedicated to the operation of these activities, were
transferred to NovAliX who will assume all ongoing research and discovery activities
in Romainville, and this for no consideration. In return, we are committed to utilizing
the research capabilities and expertise of NovAliX through a five year-collaboration and
within the context of the company’s R&D portfolio, resulting in a total purchase
commitment of €73.8 million on 30 June 2023 (€63.9 million on 31 December 2023).
The collaboration agreement and sale and purchase agreement were negotiated as a
package with one single commercial objective and with an agreed consideration for the
transaction as a whole.
The impact of the transfer of activities and personnel (reference is made to the table
below) was treated as an advance for future services to be obtained from NovaliX
throughout the five years collaboration. This advance will gradually be released through
profit or loss, in line with the purchase commitment towards NovAliX over the five year
period of the collaboration between us and NovAliX. The part still to be released on
31 December 2023 has been presented in the statement of financial position as other
current asset (€2.7 million) and other non-current asset (€5.6 million).
(thousands of €)
Loss on sale of fixed assets
Result of transfer of retirement benefit liability
Result of transfer of right-of-use asset
Advance related to the NovAliX transaction
31 December
2023
12,506
(3,022)
174
9,658
Furthermore we made an upfront payment to NovAliX of €8.3 million on closing of the
transaction which is a prepayment for the future purchase commitment for the following
five years. The remaining part has been presented in our statement of financial position
on 31 December 2023 as other current asset (€2.4 million) and other non-current asset
(€4.7 million).
235
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
29. Note to the cash flow statement
(thousands of €)
Adjustment for non-cash transactions
Depreciation and impairment
Share-based compensation expenses
Increase in retirement benefit obligations and provisions
Unrealized exchange losses/gains (-) and non-cash other financial result
Discounting effect of non-current deferred income
Discounting effect of other non-current liabilities
Fair value re-measurement of warrants
31 December
2023
2022
43,642
56,718
11
19,908
(645)
(318)
(18)
65,566
88,506
136
(41,970)
7,672
2,271
(186)
Net change in fair value of current financial investments
(22,690)
(6,929)
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
390
2,292
99,291
1,867
(79,319)
11,689
-
2,229
117,296
6,967
(14,344)
2,844
Total adjustment for items to disclose separately under operating cash
flow
(65,763)
(4,533)
Adjustment for items to disclose under investing and financing cash flows
Gain on sale of fixed assets
Investment income on current financial investments
Total adjustment for items to disclose separately under investing and
financing cash flow
Change in working capital other than deferred income
Increase in inventories
Increase (-)/decrease in receivables
Increase/decrease (-) in liabilities
Total change in working capital other than deferred income
(1,091)
(15,597)
(23)
(3,766)
(16,688)
(3,789)
(24,076)
(39,114)
31,817
(31,373)
(34,588)
68,984
(2,083)
32,313
236
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
30. Off-balance sheet arrangements
Contractual obligations and commitments
On 31 December 2023, we had outstanding obligations for
commitments, which become due as follows:
future purchase
(thousands of €)
Total
Less than
1 year
1 – 3 years
3 – 5 years
More than
5 years
Purchase commitments
408,521
237,495
143,532
25,768
1,727
On 31 December 2022, we had outstanding obligations for
commitments, which become due as follows:
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
Our purchase commitments at the end of the year 2023 included €239.6 million related
to projects in development phase (2022: €243.6 million), €79.0 million for projects in
discovery research phase (2022: €20.9 million), €45.9 million for shared services (2022:
€49.4 million), €29.9 million for commercial and medical affairs (2022: €36.0 million), and
€14.2 million related to Jyseleca® product supply chain (2022: €48.8 million).
At year end 2023, our purchase commitments towards NovAliX amounted to
€63.9 million and were included in the €79.0 million related to discovery research. We
refer to notes 2 and 28 for more information about the transaction with NovAliX.
At the end of the year 2023, €139.1 million of our purchase commitments related to the
Jyseleca® discontinued operations transferred to Alfasigma on 31 January 2024, in which
€110.8 million related to the filgotinib clinical development and €21.2 million related to
commercial and medical affairs activities.
At the end of the year 2023, we have remaining short-term contractual cost sharing
obligations related to the termination of our collaboration agreement with Gilead for
filgotinib, before its transfer to Alfasigma, amounting to €12.3 million.
We entered into a license agreement with another pharmaceutical company. Under
the terms of this agreement we have the obligation to pay potential milestones, which
are dependent on successful completion of certain development and commercial
milestones, as detailed in the agreement. At 31 December 2023 this commitment
amounts to €243.5 million on an undiscounted and non-risk adjusted basis. This amount
represents the maximum amount that would be paid if all milestones would be achieved
but excludes variable royalty payments based on unit sales.
237
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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.
On 5 May 2023, the Board of Directors issued 1,538,400 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 2023 BE, Subscription Right Plan 2023 RMV and Subscription
Right Plan 2023 ROW.
Following table shows when a subscription right becomes exercisable, per issued plan:
Subscription right exercisable as
from
First tranche of
25%
Second tranche of
25%
Third tranche of
50%
Cliff vesting
Graded vesting
Subscription right plans before 2021
Subscription right plan 2021BE
Subscription right plan 2021RMV
and ROW
Subscription right plan 2022 (A)
Subscription right plan 2022 (B)
Subscription right plan 2022BE
Subscription right plan 2022RMV
and ROW
First day after end
of third
calenderyear
following the grant
First day after end
of third
calenderyear
following the grant
-
-
-
-
-
-
-
-
1 January 2023
1 January 2024
1 January 2025
1 January 2023
1 January 2024
1 January 2025
1 January 2026
1 January 2026
-
-
-
-
-
-
-
1 January 2024
1 January 2025
1 January 2026
Subscription right plan 2023BE
1 January 2027
-
-
-
Subscription right plan 2023RMV
and ROW
-
1 January 2025
1 January 2026
1 January 2027
In the event of a change of control over Galapagos NV, all outstanding subscription rights
vest immediately and will be immediately exercisable.
238
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
The table below sets forth a summary of subscription rights outstanding and exercisable
on 31 December 2023, per subscription right plan:
Subscription
right plan
2015
2015 (B)
2015 RMV
2016
2016 RMV
2016 (B)
2017
Allocation date
Expiry date
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
2023BE
2023RMV
2023ROW
2023BE
2023ROW
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
05.05.2030
06.05.2022
05.05.2030
06.05.2022
05.05.2030
05.08.2022
04.08.2030
05.05.2023
04.05.2031
05.05.2023
04.05.2031
05.05.2023
04.05.2031
15.06.2023
14.06.2031
17.11.2023
04.05.2031
Exercise price
(€)
Outstanding
at 1 January
2023
Granted
during the
year
Exercised
during the
year
Forfeited
during the
year
Expired
during the
year
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
35.11
35.11
35.11
38.58
32.99
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
78,000
242,714
847,850
60,000
-
-
-
-
-
611,000
110,000
597,400
200,000
20,000
(61,560)
(1,663)
(241,500)
(35,000)
(5,000)
(5,000)
(10,000)
(5,000)
(8,750)
(8,750)
(88,627)
(15,775)
(8,542)
(31,404)
(115,879)
(13,714)
(39,250)
(142,350)
(1,972)
(7,500)
(35,500)
Outstanding
at 31
December
2023
Exercisable at
31 December
2023
-
-
-
-
-
-
325,500
325,500
69,000
10,000
585,000
122,500
964,995
132,500
69,000
10,000
585,000
122,500
964,995
132,500
1,208,240
1,208,240
177,250
177,250
1,369,617
1,317,779
193,300
193,300
117,030
356,418
15,000
50,770
176,256
15,000
1,032,606
226,296
667,496
30,000
1,000,000
817,828
78,000
203,464
705,500
60,000
609,028
102,500
561,900
200,000
20,000
10,816,856
1,538,400
(61,560)
(544,676)
(276,500) 11,472,520
5,836,538
239
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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
Granted during the year
Forfeited during the year
Exercised during the year
Expired during the year
Outstanding on 31 December, 2023
Exercisable on 31 December, 2023
Subscription rights
Weighted average
exercise price (€)
8,579,837
1,751,013
3,127,239
(607,430)
(282,790)
-
10,816,856
2,574,218
1,538,400
(544,676)
(61,560)
(276,500)
11,472,520
5,836,538
92.69
56.64
54.71
100.00
23.68
-
83.12
70.26
35.53
80.31
28.75
49.00
77.93
101.93
The table below sets forth the inputs into the valuation of the subscription rights.
2023BE
2023RMV/
ROW
5 May
2023 & 15
June 2023
5 May
2023 & 17
November
2023
2022 (A)
2022 (B)
2022BE
2022RMV/
ROW
2022BE/
2022ROW
13
January
2022
26
January
2022
6 May
2022
6 May
2022
6 August
2022
Weighted average exercise price
(€)
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
35.97
35.05
46.18
50.00
57.46
57.46
51.58
38.53
38.63
46.21
56.67
51.64
51.64
44.55
16.61
15.96
16.10
24.53
20.73
18.92
17.07
36.89
36.67
41.80
40.80
42.59
42.65
41.75
6.14
5.38
4.72
5.95
6.37
5.36
5.68
2.77
2.74
None
None
(0.13)
None
0.67
1.33
1.26
2.70
None
None
None
None
The exercise price of the subscription rights is determined pursuant to the applicable
provisions of the Belgian Law of 26 March 1999.
240
Galapagos NV Annual Report 2023
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 2023 in relation to subscription right plans
amounted to €56,718 thousand (2022: €88,506 thousand), of which €36,628 thousand
(€62,003 thousand) from continuing operations and €20,090 thousand (2022: €26,503
thousand) from discontinued operations.
The following table provides an overview of the outstanding subscription rights per
category of subscription right holders on 31 December 2023 and 31 December 2022:
Category
Members of the Board of Directors
Executive Committee members
Personnel
31 December
2023
7,500
1,670,500
9,794,520
2022
75,000
1,864,000
8,877,856
Total subscription rights outstanding
11,472,520
10,816,856
The outstanding subscription rights at the end of the accounting period have a weighted
average exercise price of €77.93 (2022: €83.10) and a weighted average remaining life of
1,728 days (2022: 1,914 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, Plan 2022.I and Plan 2023.I: these plans are intended to provide
a long-term incentive to certain of our employees and Executive Committee members;
Plan 2020.II, Plan 2021.II, Plan 2021.IV, Plan 2022.II and Plan 2023.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;
241
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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 2023, per
RSU plan:
RSU plan
Plan 2019.II
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.
Plan 2023.I.
Plan 2023.II.
Total
Allocation date
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
08.05.2023
9/05/2023 - 15/
06/2023 - 17/
11/2023
Outstanding
at 1
January
2023
Granted
during
the year
12,931
17,110
17,626
92,600
22,341
16,259
101,838
194,638
249,000
11,752
-
401,962
Forfeited
during
the year
(768)
(2,558)
(6,530)
(23,150)
(7,447)
(2,636)
(52,462)
(49,844)
(83,602)
(349)
(35,380)
Paid in cash
during
the year
Outstanding
at 31
December
2023
(12,163)
(9,361)
(8,335)
(26,621)
(5,416)
(8,207)
(33,946)
(41,486)
(59,270)
(5,873)
-
-
5,191
2,761
42,829
9,478
5,416
15,430
103,308
106,128
5,530
366,582
-
736,095
518,548
920,510
(5,748)
(270,474)
-
(210,678)
512,800
1,175,453
242
Galapagos NV Annual Report 2023
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
2023
736,095
920,510
(270,474)
(210,678)
1,175,453
2022
657,803
470,273
(172,885)
(219,096)
736,095
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 2023 amounted to €13.8 million (2022: €12.9 million).
The following table provides an overview of the outstanding RSUs per category of RSU
holders on 31 December 2023 and 31 December 2022.
Category (in number of RSUs)
Executive Committee members
Personnel
Total outstanding RSUs
32. Related parties
31 December
2023
438,738
736,715
1,175,453
2022
332,038
404,057
736,095
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 25.38%
at 31 December 2022 and to 25.35% at 31 December 2023, due to four capital increases
resulting from the exercise of subscription rights under employee subscription right
plans in the course of 2022 (three capital increases) and 2023 (one capital increase).
243
Galapagos NV Annual Report 2023
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 table details our relation with Gilead:
(thousands of €)
Relations with Gilead
Trade and other receivables(1)
Trade and other payables
(thousands of €)
Revenues recognized related to the performance obligation for the drug
discovery platform
Revenues recognized related to the filgotinib performance obligation(2)
Royalty income related to the commercialization of filgotinib
Cost reimbursements related to the development of GLPG1690(3)
Cross charges from and to Gilead relating to filgotinib(4)
Costs (-)/deduction of costs relating to our 50/50 profit/(cost) share
mechanism(5)
included in sales and marketing expenses
included in research and development expenditure
Purchase of raw materials, semi-finished products and finished products of
Jyseleca®
31 December
2023
2022
5,198
585
7,877
-
Year ended
31 December 2023
2023
2022
230,242
429,439
9,466
299
3,643
230,423
174,432
10,726
411
(2,374)
31
(31)
13,539
(1) Consisting of filgotinib development cost sharing receivables of €2.5 million and royalties receivables of €2.4 million
(2) Upfront and milestone payments recognized in accordance with the percentage of completion of the underlying obligation
(3) Shown as decrease of research and development expenditure
(4) Net amount shown as an (increase)/decrease of research and development expenditure
(5) Profit/cost share mechanism came to an end beginning of 2022
As at 31 December 2023 we have two outstanding performance obligations under
IFRS 15 towards Gilead, which are the performance obligation related to our drug
discovery platform and the termination of our performance obligation relating to
filgotinib before its transfer to Alfasigma on the 31 January 2024 following the closing of
the transaction for the transfer of the Jyseleca® business. This results in an outstanding
deferred income balance of €1.3 billion for the drug discovery platform (including the
warrant
issuance liability relating to subsequent warrant B) and a remaining
€26.3 million deferred income for the performance obligation relating to filgotinib.
A detailed explanation of our transactions with Gilead in 2023 and 2022 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.
244
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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 2023, our Executive Committee had five members: Stoffels IMC BV
(permanently represented by Dr. Paul Stoffels), Mr. Thad Huston, Mr. Michele Manto,
Ms. Valeria Cnossen and Ms. Annelies Missotten. They provide their services to us on a
full-time basis. Mr. Michele Manto's mandate as a member of the Executive Committee
ended on 31 December 2023.
On 31 December 2023, our Board of Directors consisted of nine members: Stoffels IMC
BV (permanently represented by Dr. Paul Stoffels), Mr. Peter Guenter, Mr. Daniel O’Day,
Dr. Linda Higgins, Dr. Elisabeth Svanberg, Mr. Jérôme Contamine, Dr. Dan Baker, Dr.
Susanne Schaffert and Mr. Simon Sturge.
During its meeting of 12 June 2023, the Board of Directors appointed Dr. Susanne
Schaffert by cooptation as a non-executive independent Director, replacing Dr. Rajesh
Parekh who stepped down on 10 June 2023.
During its meeting of 19 September 2023, the Board of Directors appointed Mr. Simon
Sturge by cooptation as a non-executive independent Director, replacing Dr. Mary Kerr
who stepped down on 18 September 2023.
Dr. Susanne Schaffert’s and Mr. Simon Sturge’s appointments will be submitted to the
confirmation of the Company’s Annual Shareholders’ Meeting which will be held on
30 April 2024.
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 CEO, Stoffels IMC BV, permanently represented by
Dr. Paul Stoffels, has been appointed as the Chair of the Board of Directors 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 Chair of the Board
of Directors or of any Committee.
Reference is made to the Remuneration Report, which discloses the remuneration
awarded to each member of the Board of Directors and Executive Committee during
2023.
245
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
The remuneration package of the members of key management personnel comprises:
Thousands of € (except for the number of subscription rights and RSUs)
2023
2022
Year ended 31 December
Remuneration of key management personnel:
Short-term benefits to Executive Committee members as a group(1)
Board fees for members of the Board of Directors
Post-employment benefits(2)
Severance package(3)
Subscription rights granted in the year
3,902
749
209
3,150
3,444
740
240
-
Number of subscription rights granted in the year to Executive Committee
members as a group
Total cost of subscription rights granted in the year under IFRS 2
325,000
5,163
1,124,000
27,010
Number of RSUs granted in the year
Total number of RSUs granted in the year to Executive Committee members
as a group(1)(4)
331,066
200,478
(1) 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 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 (prorated)
remuneration is included in the overview for the financial years 2022 and 2023. Mr. Bart Filius was a member of the Executive Committee
until 30 June 2023 and Mr. Michele Manto was a member of the Executive Committee until 31 December 2023. Their (prorated)
remuneration and benefits are included in the overview for the financial years 2022 and 2023. Ms. Valeria Cnossen and Ms. Annelies
Missotten were members of the Executive Committee as of 1 January 2023. Mr. Thad Huston was a member of the Executive Committee as
of 1 July 2023. Their (prorated) remuneration and benefits are included in the overview for the financial year 2023.
(2) Only Executive Committee members receive post-employment benefits.
(3) In 2023, we dislose Mr. Filius' severance package. The reported amount for 2023 consists of an amount paid to Mr. Filius in accordance with
the severance package awarded to him as well as an amount paid in 2023 in accordance with the severance package awarded to Mr. Van de
Stolpe, our former CEO, in 2021. In 2022, an amount of €689 thousand was paid to Dr. Wigerinck, our former CSO, and Mr. Van de Stolpe in
accordance with severance packages awarded to them and disclosed in 2021.
(4) This is the sum of the RSUs awarded during the respective financial year, excluding the RSUs representing the deferred portion of the
bonus for 2022 in FY2022 and for 2023 in FY2023 (each time to be granted in the following financial year). Only Executive Committee
members were awarded RSUs.
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.
246
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
33. Consolidated companies as of 31 December 2023
Name of the subsidiary
Continuing operations
Country
Glpg US Inc. (formerly AboundBio Inc.)
United States
Galapagos B.V. (merged with CellPoint B.V.)
The Netherlands
Galapagos GmbH
Switzerland
Glpg US Holding Inc. (formerly Galapagos Inc.)
United States
Galapagos NV
Galapagos Real Estate Belgium BV
Belgium
Belgium
Galapagos Real Estate Netherlands B.V.
The Netherlands
Galapagos SASU
Xenometrix, Inc. in liquidation
France
United States
Discontinued operations
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
Sweden
Norway
Finland
Denmark
Austria
Ireland
Galapagos Biotech Ltd
United Kingdom
% voting right
Galapagos NV
(directly
or indirectly through
subsidiaries)
Change in % voting
right previous period
(2023 vs 2022)
100%
100%
100%
100%
Parent company
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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.
247
Galapagos NV Annual Report 2023
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 (the below table does not contain the
financial assets and liabilities included in the disposal group held for sale - reference is
made to note 5 for more information):
(thousands of €)
Financial assets held at fair value through profit or loss
Equity instruments
Current financial investments
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
31 December
2023
2022
Notes
13,575
-
1,316,805
1,292,514
2,200,893
2,293,431
166,803
508,117
5,533
318
17,494
4,569
1,209
28,194
3,721,421
4,128,033
-
-
19
8,485
20,972
13,582
87,966
9,596
-
68,928
21,901
6,222
16
20
20
21
16
16
19
25
25
25
25
24
25
Total financial liabilities
118,534
119,137
248
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
The carrying amounts of trade payables and trade receivables are considered to be the
same as their fair values, due to their short-term nature.
Financial assets held at fair value through profit or loss
Financial assets held at fair value through profit or loss consisted of an equity instrument
of a non-listed company and current financial investments.
We have no restrictions on the sale of this equity instrument and the asset is not pledged
under any of our liabilities.
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
€3,684.5 million on 31 December 2023. 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 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.
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. All our receivables are
considered collectable.
We did not account for a provision for expected credit losses relating to our trade and
other receivables given that there is no history of material credit losses, nor does forward
looking information reveals any potential risk and due to the high-quality nature of our
customers.
249
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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
2023
3
3
117
2022
424
208
473
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 €36.8 million (2022: €40.9 million); a 100
basis points decrease in interest rates would have decreased profit or loss, and equity,
by approximately €36.8 million (2022: €40.9 million). These scenarios assume our entire
cash portfolio would immediately reprice at the new interest rates.
Foreign exchange risk
We are exposed to foreign exchange risk arising from various currency exposures. Our
principal
functional currency is euro, but we receive payments from our main
collaboration partner Gilead in U.S. dollars and acquire some consumables and
materials in U.S. dollars, Swiss francs, and GB pounds.
To limit this risk, we attempt to align incoming and outgoing cash flows in currencies
other than EUR. In addition, contracts closed by our different entities are mainly in the
functional currencies of that entity, except for the collaboration agreement signed with
Gilead for which payments are denominated in U.S. dollars.
250
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
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
2023
(78,013)
666
385
2022
(85,140)
960
557
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.
251
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
35. Statutory auditor’s remuneration
BDO Bedrijfsrevisoren BV (BDO) was appointed as statutory auditor by the Shareholders’
Meeting held on 25 April 2023, for a term of three years expiring immediately after the
Annual Shareholders’ meeting to be held in 2026 which will have decided upon the
annual accounts for the financial year to be ended on 31 December 2025.
Deloitte Bedrijfsrevisoren BV (Deloitte) ceased to be our statutory auditor as of the date
of the Annual Shareholders’ Meeting held on 25 April 2023.
Our principal accountants billed the following fees to us for professional services
rendered in 2023 (BDO) and 2022 (Deloitte).
The statutory auditor’s fees for carrying out its mandate at group level amounted to
€1,124.0 thousand in 2023 (2022: €1,127.1 thousand). The 2023 audit fee was €191.3
thousand higher compared to the fee that was approved by the Shareholders’ Meeting
held on 25 April 2023 due to exceptional audit activities and special assignments
performed by the statutory auditor. Audit-related fees, which generally the auditor
provides, amounted to €20.2 thousand in 2023 (2022: €26.9 thousand). Other fees related
to non-audit services executed by the statutory auditor amounted to €6.6 thousand in
2023 (2022: €nil) and related to ESG reporting. Other fees related to non-audit services
executed by persons related to the statutory auditor amounted to €nil in 2023 (2022:
€429.5 thousand and related to advisory services in relation to IT and quality
management). Tax fees amounted to €68.0 thousand in 2023 (2022: €nil) and related to
tax assistance relating to personal payroll taxes related to prior year filings. 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 Code of Companies and Associations.
36. Events after balance sheet date
On 3 January 2024, we signed a strategic collaboration and license agreement with
BridGene Biosciences to further strengthen our growing early-stage oncology precision
medicine pipeline. Under the terms of the agreement, BridGene will receive from us up
to $27 million in upfront and preclinical research milestone payments and potentially
over $700 million in clinical and commercial milestones, assuming success of the
programs. In addition, BridGene will be entitled to receive single-digit tiered royalties on
net sales of each product resulting from the collaboration.
On 4 January 2024, we announced that we entered into a strategic collaboration
agreement with Thermo Fisher Scientific for CAR-T manufacturing and kitting services for
our point-of-care CAR-T product candidate in the San Francisco area. Under the terms
of the agreement, Thermo Fisher will provide GMP manufacturing as well as BioServices
and Specialty Logistics for our CAR-T hemato-oncology clinical program in the San
Francisco area, effective January 2024. We will initiate the technology transfer to enable
Thermo Fisher’s manufacturing activities.
252
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
On 31 January 2024, we successfully completed the transaction with Alfasigma for the
transfer of the Jyseleca® business after having met all closing conditions. As part of
the transaction, the amended Filgotinib Agreement between us and Gilead has been
assigned by us to Alfasigma. Alfasigma paid us an upfront payment of €50.0 million
plus €13.2 million for cash and working capital subject to final settlement based on
completion accounts. We are entitled to potential
future sales-based milestone
payments totaling €120 million and mid-single to mid-double-digit royalties on
European sales. We will contribute up to €40 million to Alfasigma by June 2025 for
Jyseleca® related development activities.
On 31 January 2024, we participated for $40.0 million in Series C financing round of
Frontier Medicines, a pioneer in precision oncology with a unique technology platform
and a pipeline of potential best-in-class assets that fit with our precision oncology R&D
approach. The investment aligns with our innovation acceleration strategy to bring
transformational medicines to patients around the world.
On 26 March 2024, our consolidated financial statements were approved by the Board
of Directors and authorized for publication. 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 26 March 2024
253
Galapagos NV Annual Report 2023
FINANCIAL STATEMENTS
Overview statutory results of Galapagos NV
This overview only concerns an abbreviated version of 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. The complete version of the statutory accounts
of Galapagos NV will be filed with the National Bank of Belgium. The statutory auditor’s
report contains an unqualified opinion on the statutory accounts of Galapagos NV.
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
2023
628,899
6,808
352,580
16,103
547
2022
418,495
4,414
349,508
12,847
19
Operating income
1,004,937
785,283
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 in provisions
Other operating charges
Non-recurring operating costs
Operating profit/loss (-)
Finance income
Finance cost
Non-recurring finance cost
Profit/loss (-) before tax
Taxes
Profit/loss (-) for the year
Loss brought forward
(28,718)
(397,124)
(73,556)
(360,512)
(4,220)
(70,785)
(1,037)
(19,860)
(420,835)
(77,772)
(357,368)
(2,105)
(102,149)
(36,854)
68,985
(231,661)
213,501
(27,417)
(10,069)
135,554
(60,964)
-
245,000
(157,071)
26,292
19,092
271,292
(137,980)
(507,217)
(369,237)
Accumulated losses to be carried forward
(235,924)
(507,217)
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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
Current liabilities
Trade and other payables
Tax, payroll and social security liabilities
Accrued costs
Deferred income
Total equity and liabilities
31 December
2023
464,865
58,349
16,025
268,400
122,091
3,836,396
73,978
91,066
10,889
14,651
3,645,812
4,301,261
2,781,703
356,445
2,661,182
(235,924)
1,519,558
13,972
13,972
1,505,586
178,117
23,758
538
1,303,173
4,301,261
2022
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
Galapagos NV’s operating income increased by €219.6 million in 2023, from €785.3
million in 2022 to €1,004.9 million in 2023. This increase was due to a higher turnover,
of €210.4 million, mainly recognition of upfront payments. This increase was explained
by a substantial decrease in our assessment of the remaining costs to complete the
filgotinib development following the recent transfer of our entire Jyseleca® business to
Alfasigma, including the transfer of the remaining development performance obligation
after closing of the transaction. As a result, there was a substantial increase of the
percentage of completion of our performance obligation and a positive catch-up
released to revenues.
There was also an increase due to internally generated intangible assets – being
capitalized R&D expenses – which contributed by €3.1 million more to our operating
income than previous year. Other operating income increased with €3.3 million and
amounted to €16.1 million for the year ended 31 December 2023, including €6.6 million
of grants recognized for R&D projects and €7.8 million recuperation of withholding taxes
for scientists.
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The operating costs of 2023 amounted to €935.9 million compared to €1,016.9 million in
2022.
Material purchases increased from €19.9 million in 2022 to €28.7 million in 2023.
Services and other goods decreased substantially to €397.1 million compared to
€420.8 million in 2022, primarily due to decreased external subcontracting for our
preclinical studies and clinical trials.
Personnel costs in 2023 decreased to €73.6 million compared to €77.8 million in 2022.
The number of employees at Galapagos NV at the end of 2023 amounted to 367 as
compared to 442 at the end of 2022, excluding insourced personnel. The average number
of FTE in 2023 decreased to 369, compared to 433 in 2022.
Depreciation increased to €360.5 million in 2023, compared to €357.4 million in 2022,
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 €102.1 million in 2022 to €70.8 million in 2023
caused by a reduction in transferpricing management fees. Non-recurring operating
costs in 2022 consisted of impairments of intangible fixed assets related to discontinued
projects.
Galapagos NV’s 2023 financial
income increased to €213.5 million compared to
financial costs decreased to €27.4 million compared to
€135.6 million in 2022,
€61.0 million in 2022. Non-recurring finance cost in 2023 consisted of impairment on
financial assets. The net exchange gain decreased from €54.9 million in 2022 to a net
exchange loss of €29.3 million in 2023 and consisted mainly of non-realized currency
exchange losses on U.S. dollar. The net interest income in 2023 amounted to
€97.9 million as compared to a net interest income of €10.8 million in 2022. Financial
income also included dividend income of €109.5 million.
Tax income recorded in 2023 of €26.3 million as compared to €19.1 million tax income in
2022, related to tax incentives for investments in intangible fixed assets.
Investments in fixed assets in 2023 amounted to €47.6 million, excluding the internally
generated assets. They consisted mainly of investments in intangible assets, being a
license payment and software, as well of costs for building improvements, new
laboratory and IT equipment.
Non-current and current other receivables amounted to respectively €122.1 million and
€64.1 million and included the receivable for tax incentives amounting to respectively
€117.4 million and €13.8 million in 2023, compared to other receivables for tax incentives
of €87.8 million and €14.2 million in 2022.
Galapagos NV’s cash position at the end of 2023 amounted to €3,645.8 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
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legal and regulatory requirements. They show a positive result. The financial year 2023
closed with a profit of €271.3 million compared to a loss of €138.0 million in 2022.
The non-consolidated annual accounts of Galapagos NV show accumulated losses of
€235.9 million as at 31 December 2023; we refer to the Going concern statement for
justification for the application of the valuation rules under the going concern
assumption.
In 2023, 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.
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REPORT OF THE STATUTORY AUDITOR
Report of the statutory auditor
Statutory auditor’s report to the general meeting of
Galapagos NV for the year ended 31 December 2023
(Consolidated Financial Statements)
In the context of the statutory audit of the consolidated financial statements of
Galapagos NV (‘the Company’) and its subsidiaries (together referred to as ‘the Group’),
It includes our report of the
we hereby present our statutory auditor’s report.
consolidated financial statements and the other legal and regulatory requirements. This
report is an integrated whole and is indivisible.
We have been appointed as statutory auditor by the general meeting of 25 April 2023,
following the proposal
issued upon
recommendation of the Audit Committee and upon presentation by the works’ council.
Our statutory auditor’s mandate expires on the date of the General Meeting deliberating
on the financial statements closed on 31 December 2025. We have performed the
statutory audit of the consolidated financial statements of the Group for one year.
formulated by the administrative body,
Report on the consolidated financial statements
Unqualified opinion
We have performed the statutory audit of the Group’s consolidated financial statements,
which comprise the consolidated statement of financial position as at 31 December
2023, the consolidated income statement, consolidated statement of comprehensive
income/loss, changes in equity and cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of material accounting policies
and other explanatory information, and which is characterised by a consolidated
statement of financial position total of 4,357,396 thousand EUR and for which the
consolidated income statement shows a profit for the year of 211,697 thousand EUR.
In our opinion, the consolidated financial statements give a true and fair view of
the Group’s net equity and financial position as at 31 December 2023, as well as of its
consolidated financial performance and its consolidated cash flows for the year then
in accordance with International Financial Reporting Standards (IFRS) as
ended,
adopted by the European Union and with the legal and regulatory requirements
applicable in Belgium.
Basis for unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISA) as
applicable in Belgium.
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Our responsibilities under those standards are further described in the ‘Statutory
auditor’s responsibilities for the audit of the consolidated financial statements’ section
in this report.
We have complied with all the ethical requirements that are relevant to the audit of
consolidated financial
concerning
independence.
in Belgium,
statements
including
those
We have obtained from the administrative body and company officials the explanations
and information necessary for performing our audit.
We believe that the audit evidence we have 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 year.
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 percentage of completion used
for revenue recognition related to the filgotinib
performance obligation under the license and
collaboration agreement with Gilead, reported
within the results from discontinued operations
Critical Audit Matter Description
As described in notes 2, 4, 5 and 26 to the consolidated financial statements, the
Company recognized collaboration revenues of 429.4 million EUR in 2023 from upfront
payments and milestone payments related to the filgotinib performance obligation
under the license and collaboration agreement with Gilead (the “agreement”). The
Company recognized revenue using the cost-to-cost input method, which management
believes best depicts the transfer of control to the customer. The extent of progress
towards completion is measured based on the ratio of actual costs incurred to date, to
the total estimated costs expected upon satisfying the filgotinib performance obligation.
Significant management judgment is required in determining the total estimated costs
still to incur and the period over which the Company is expected to complete its
performance obligation, impacting the revenue recognition. This significant estimate
is the principal 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 critical 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
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evidence related to management’s assumptions of the estimation of total costs to
complete.
How the Critical Audit Matter Was Addressed in the Audit
The primary procedures we performed to address this critical audit matter included:
Testing the design and operating effectiveness of controls over management’s
assessment on determining the estimate of total costs to complete the performance
obligation, which included evaluating the reasonableness of significant assumptions
related to the estimate;
Testing the accuracy and completeness of actual costs incurred to date based on a
sample;
Evaluating management’s ability to reasonably estimate the costs to complete the
performance obligation, including:
Evaluating the appropriateness of changes made during the period to
management’s estimates of total costs to complete.
Performing a comparison of management’s prior period cost estimates to actual
costs incurred and approved.
Evaluating the period over which management is expecting the Company to
complete its performance obligation.
Comparing certain costs to third-party supporting evidence.
Considering the impact of any subsequent events on management’s
assumptions.
Discontinued operations and assets and liabilities
held for sale related to the transfer of Jyseleca®
business to Alfasigma
Critical Audit Matter Description
As described in note 2 and 5 to the consolidated financial statements, the Company
announced on October 30, 2023, the signing of a letter of intent contemplating the
transfer of the Jyseleca® business to Alfasigma. On December 30, 2023 the Share and
Asset Purchase Agreement (‘SAPA’) was signed with the final closing of the transaction
being subject to closing conditions. On January 31, 2024 these conditions, including the
signing of the Transition agreement, were fulfilled and the transaction was closed.
Significant management judgement was used in the determination and classification
of the expenses incurred directly in relation to the Jyseleca® business as discontinued
operations, which involved certain judgments in allocating expenses and in the
identification of the assets and liabilities that form part of the disposal group relating to
the transfer of the Jyseleca® business, considering the transition period and conditions
agreed with Alfasigma. This significant judgment is the principal consideration for our
conclusion that procedures relating to auditing management’s judgements applied to
the determination and classification of the expenses and in the identification of the
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assets and liabilities is a critical audit matter. Significant audit effort was involved in
performing these procedures.
How the Critical Audit Matter Was Addressed in the Audit
The primary procedures we performed to address this critical audit matter included:
Testing the design and operating effectiveness of controls over management’s
accounting treatment
the
determination of the assets and liabilities allocated to the disposal group;
for discontinued operations,
including those over
Evaluating management’s judgements over the identification of all assets and
liabilities belonging to the disposal group by reading relevant agreements and
assessing the Company’s ongoing involvement during the transition period agreed
with Alfasigma;
Assessing the reasonableness of the judgements applied by management in
allocating expenses to the discontinued operations by inspecting supporting
documentation, and inquiring management regarding specific assumptions made.
Responsibilities of the administrative body for the drafting
of the consolidated financial statements
The administrative body is responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance with the International Financial
Reporting Standards (IFRS) as adopted by the European Union and with the legal and
regulatory provisions applicable in Belgium, and for such internal control as the
administrative body determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatements, whether due to fraud or
error.
In preparing the consolidated financial statements,
the administrative body is
responsible for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of
accounting unless the administrative body either intends to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Statutory auditor’s responsibilities 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 it is not a guarantee that an
audit conducted in accordance with ISAs 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.
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When executing our audit, we respect the legal, regulatory and normative framework
applicable for the audit of the consolidated financial statements in Belgium. However, a
statutory audit does not guarantee the future viability of the Group, neither the efficiency
and effectiveness of the management of the Group by the administrative body. Our
responsibilities regarding the continuity assumption applied by the administrative body
are described below.
As part of an audit in accordance with ISAs, 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 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 administrative body;
Conclude on the appropriateness of the administrative body’s use of the going
concern basis of accounting and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our statutory
auditor’s report to the related disclosures in the consolidated financial statements
or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our statutory auditor’s report.
However, future events or conditions may cause the Group to cease to continue as a
going concern;
Evaluate the overall presentation, structure and content of the consolidated financial
statements and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation;
Obtain sufficient appropriate audit evidence regarding the financial information of
the entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the management, the
supervision and the performance of the Group audit. We assume full responsibility
for the auditor’s opinion.
We communicate with the Audit Committee regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control identified during the audit.
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We also provide the Audit Committee with a statement that we respected the relevant
ethical requirements relating to independence, and we communicate with them about
all relationships and other issues which may influence our independence, and,
if
applicable, about the related measures to guarantee our independence.
From the matters communicated with the Audit Committee, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the
current year, and are therefore the key audit matters. We describe these matters in our
statutory auditor’s report, unless law or regulation precludes public disclosure about the
matter.
Other legal and regulatory requirements
Responsibilities of the administrative body
The administrative body is responsible for the preparation and the contents of the
director’s report on the consolidated financial statements, the statement of non-
financial information attached to the director’s report on the consolidated financial
statements and for the other information included in the annual report on the
consolidated financial statements.
Responsibilities of the statutory auditor
In the context of our mission and in accordance with the Belgian standard (version
revised 2020) which is complementary to the International Standards on Auditing (ISA)
as applicable in Belgium, it is our responsibility to verify, in all material aspects, the
director’s report on the consolidated financial statements, the statement of non-
financial information attached to the director’s report on the consolidated financial
statements and the other information included in the annual report on the consolidated
financial statements, as well as to report on these elements.
Aspects relating to the director’s report on the consolidated
financial statements and to the other information included
in the annual report on the consolidated financial
statements
In our opinion, after having performed specific procedures in relation to the director’s
report, this director’s report is consistent with the consolidated financial statements for
the same financial year, and it is prepared in accordance with article 3:32 of the Code of
companies and associations.
In the context of our audit of the consolidated financial statements, we are also
responsible for considering, in particular based on the knowledge we have obtained
during the audit, whether the director’s report on the consolidated financial statements
and the other information included in the annual report on the consolidated financial
statements, contain a material misstatement, i.e. information which is inadequately
disclosed or otherwise misleading. Based on the procedures we have performed, there
are no material misstatements we have to report to you.
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The non-financial information, as required by article 3:32, §2 of the Code of companies
and associations, has been included in a separate report attached to the director’s report
on the consolidated annual accounts, which is part of the section on sustainability in
the annual report. This report of non-financial information contains the information
required by article 3:32, §2 of the Code of companies and associations and is consistent
with the consolidated annual accounts for the same financial year. In preparing this non-
financial information, the Company has based itself on the United Nations’ Sustainable
Development Goals (“SDG’s”). In accordance with article 3:80, §1, first paragraph, 5° of
the Code of companies and associations, we do not express an opinion on the question
whether this non-financial information has been prepared in accordance with the
information contained in the director’s report on the consolidated annual accounts in
accordance with the SDG’s.
Statement concerning independence
Our audit firm and our network did not provide services which are incompatible
with the statutory audit of the consolidated financial statements and our audit firm
remained independent of the Group during the terms of our mandate.
The fees related to additional services which are compatible with the statutory audit
as referred to in article 3:65 of the Code of companies and associations were duly
itemised and valued in the notes to the consolidated financial statements.
European Single Electronic Format (ESEF)
In accordance with the draft standard of the Institute of Bedrijfsrevisoren concerning the
standard on auditing the conformity of financial statements with the European Single
Electronic Format (hereinafter “ESEF”), we also audited the conformity of the ESEF
format with the regulatory technical standards established by Commission Delegated
Regulation (EU) 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”).
The administrative body is responsible for preparing,
in accordance with ESEF
requirements, the consolidated financial statements in the form of an electronic file
in ESEF format (hereinafter “digital consolidated financial statements”) included in the
annual financial report.
It is our responsibility to obtain sufficient and appropriate supporting information to
conclude that the format and mark-up language of the digital consolidated financial
statements comply in all material aspects with the ESEF requirements under the
Delegated Regulation.
Based on our work, we believe that the format and the mark-up of information in the
official Dutch version of the digital consolidated financial statements included in the
annual financial report of Galapagos NV as at 31 December 2023 comply in all material
aspects with the ESEF requirements under the Delegated Regulation.
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Other statements
This report is in compliance with the contents of our additional report to the Audit
Committee as referred to in article 11 of regulation (EU) No 537/2014.
Zaventem, 28 March 2024
BDO Bedrijfsrevisoren BV
Statutory auditor
Represented by Ellen Lombaerts*
Auditor
*Acting for a company
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OTHER INFORMATION
Glossary
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
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
Antigen-binding fragment (Fab)
The fragment antigen-binding (Fab fragment) is a region on an antibody that binds to
antigens. It is composed of one constant and one variable domain of each of the heavy
and the light chain
Assays
Laboratory tests to determine characteristics
ATALANTA-1
ATALANTA-1 Phase 1/2 study with point-of-care manufactured CD19 CAR-T candidate,
GLPG5101, in patients with replapsed/ refractory non-Hodgkin lymphoma (rrNHL)
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
Biologics
Biologics, 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
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OTHER INFORMATION
human blood and plasma. What distinguishes biologics 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
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
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
Cash position
Current financial investments and cash and cash equivalents
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
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)
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)
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
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
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Contract research organization (CRO)
Organization which provides drug discovery and development services to the
pharmaceutical, biotechnology and medical devices industry
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
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
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
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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
DIVERSITY
Phase 3 program evaluating filgotinib in CD
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
Efficacy
Effectiveness for intended use
EMA
European Medicines Agency,
medications
in charge of European market authorization of new
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
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 transformation (RT)
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
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Filgotinib
Formerly known as GLPG0634, commercial name is Jyseleca®. Small molecule
preferential JAK1 inhibitor, approved in RA and UC in the European Union, Great-Britain
and Japan. Phase 4 studies in both RA and UC are ongoing
FILOSOPHY
Phase 4 program evaluating filgotinib in RA
FINCH
Phase 3 program evaluating filgotinib in RA
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
G&A expenses
General & administrative expenses
GALACELA
Phase 2 study with GLPG3667 in patients with systemic lupus erythematous
GALARISSO
Phase 2 study with GLPG3667 in patients with dermatomyositis
GLPG0634
Molecule number currently known as filgotinib and Jyseleca®
GLPG3667
A TYK2 kinase inhibitor discovered by us, topline results from the Phase 1b in psoriasis
reported in July 2021
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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
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
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-/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
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
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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
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
Jyseleca®
Jyseleca® is the brand name for filgotinib
Leukapheresis
Laboratory procedure in which white blood cells are separated from a sample of blood
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
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
Milestone
Major achievement in a project or program; in our alliances, this is usually associated
with a payment
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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
A new drug application (NDA) is a request to the FDA for a license to market a new drug
in the U.S. A NDA must show the chemical and pharmacologic description of the drug,
the results of clinical trials, and the proposed drug label
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
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
OLINGUITO
Phase 3 study with filgotinib in patients with axial spondyloarthritis
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
Outsourcing
Contracting work to a third party
PAPILIO-1
Phase 1/2 study with GLPG5301 in patients with relapsed/refractory multiple myeloma
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
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processes determine the blood concentration of the drug and its metabolite(s) as a
function of time from dosing
Phase 1
First stage of clinical testing of an investigational drug designed to assess the safety and
tolerability, pharmacokinetics of a drug, usually performed in a small number of healthy
human volunteers
Phase 2
Second stage of clinical testing, usually performed in no more than several hundred
patients, in order to determine efficacy, tolerability and the dose to use
Phase 3
Large clinical trials, usually conducted in several hundred to several thousand patients
to gain a definitive understanding of the efficacy and tolerability of the candidate
treatment; serves as the principal basis for regulatory approval
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
PRAC
Pharmacovigilance Risk Assessment Committee of the European Medicines Agency,
responsible for assessing all aspects of risk management of human medicines
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
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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
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 transformation
Richter 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
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
SIK
Salt-inducible kinase
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Single-chain variable fragments (scFv)
Single-chain variable fragments (scFvs) are small-sized artificial constructs composed
of the immunoglobulin heavy and light chain variable regions connected by a peptide
linker
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
Systemic lupus erythematosus (SLE)
An autoimmune disease, with systemic manifestations including skin rash, erosion of
joints or even kidney failure
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
Target discovery
Identification and validation of proteins that have been shown to play a role in a disease
process
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
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)
Variable heavy (VH) domain
The variable domain of an immunoglobulin heavy chain is a part of an antibody that
binds to a specific antigen
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Financial calendar
30 April 2024
Annual Shareholders’ Meeting in Mechelen, Belgium
2 May 2024
First quarter 2024 results
1 August 2024
First half year 2024 results
30 October 2024
Third quarter 2024 results
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Colophon
Concept, design and online programming
nexxar GmbH, Vienna – Online annual reports and online sustainability reports
www.nexxar.com
Photography
Frank van Delft
Cocoon® images courtesy of Lonza Group AG
Private photographs
Video
Videofactory BV
Drawify – Axelle Vanquaillie
Copy deadline: 26 March 2024
This report is also available in Dutch and available for download in the Downloads
section of this report or on the Galapagos website.
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Contact
Sofie Van Gijsel
Sandra Cauwenberghs
Head of Investor Relations
Director of Investor Relations
Galapagos NV
Galapagos NV
Generaal De Wittelaan L11 A3
Generaal De Wittelaan L11 A3
2800 Mechelen, Belgium
2800 Mechelen, Belgium
Tel. +1 781 296 1143
Email: ir@glpg.com
Tel. +32 15 34 29 00
Email: ir@glpg.com
Marieke Vermeersch
Head of Corporate Communication
Galapagos NV
Generaal De Wittelaan L11 A3
2800 Mechelen, Belgium
Tel. +32 479 49 06 03
Email: communications@glpg.com
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