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01/10 19:39
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary presents mixed signals. Financial performance shows a decrease in cash and interest income, but strategic currency shifts and stable income from royalties are positives. The Q&A highlights a focus on strategic partnerships, particularly with Gilead, but lacks clarity on deal specifics and internal pipeline strategies. The absence of strong guidance or new partnership announcements tempers expectations. Overall, the sentiment is balanced, suggesting a neutral stock price movement.
Total operating loss from continuing operations (9 months 2025) EUR 462.2 million, compared to EUR 125.6 million for the first 9 months of 2024. The increase was due to an impairment on the cell therapy business of EUR 204.8 million and a EUR 135.5 million impact related to the strategic reorganization announced in January 2025.
Net other financial income (9 months 2025) EUR 30.4 million, compared to EUR 71.7 million for the first 9 months of 2024. The decrease was due to a reduction in interest income from EUR 70.6 million in 2024 to EUR 31.4 million in 2025, attributed to lower interest rates and a shift in investment strategy.
Fair value gains and interest income (9 months 2025) EUR 77.2 million, derived from cash, cash equivalents, and current financial investments, excluding currency exchange rate impact.
Financial investments, cash, and cash equivalents (as of September 30, 2025) EUR 3.05 billion, compared to EUR 3.32 billion on December 31, 2024. The decrease reflects ongoing operational and strategic expenses.
Cash and cash equivalents and current financial investments in U.S. dollars (as of September 30, 2025) $2.16 billion, compared to $726.9 million on December 31, 2024. The increase was due to a strategic shift in currency holdings.
Interest income (9 months 2025) EUR 31.4 million, compared to EUR 70.6 million for the first 9 months of 2024. The decline was due to lower interest rates and a shift from term deposits to money market funds.
Income from Jyseleca royalties and earn-outs Approximately EUR 15 million to EUR 20 million annually, expected to continue into the mid-2030s with potential upside.
Tax receivables (next 3 years) Approximately EUR 20 million to EUR 35 million per year, with additional opportunities for credits beyond that.
TYK2 Program: The TYK2 program is progressing with Phase III enabling studies for GLPG3667, an oral TYK2 inhibitor. Data from two studies are expected by early 2026, ahead of schedule. The program has shown differentiation from other TYK2 inhibitors and potential for significant value.
Business Development Strategy: Galapagos is focusing on clinically derisked and differentiated opportunities that enhance the standard of care. The company is leveraging its partnership with Gilead to explore joint acquisitions, licensing, and other creative deal structures.
Cell Therapy Business Wind Down: The company plans to wind down its cell therapy business after failing to find viable buyers or investors. This decision impacts approximately 365 employees and involves closing sites in Europe, the U.S., and China. The process is expected to conclude by Q1 2026.
Financial Position: Galapagos has a cash balance of approximately EUR 3 billion, generating significant interest income. The company expects to end 2025 with EUR 2.975 billion to EUR 3.05 billion in cash and investments, excluding business development activities.
Company Transformation: Galapagos is undergoing a transformation, focusing on business development and rebuilding its pipeline. The company has assembled a new leadership team and strategic advisory board to drive this change.
Spin-off failure and strategic alternatives: The planned spin-off of the cell therapy business could not be executed as planned, leading to a strategic review and sale process. Despite efforts, no viable proposals were presented to support the business, resulting in the decision to wind down the cell therapy business. This failure highlights challenges in executing strategic initiatives and finding suitable buyers or investors.
Significant investment requirements: The cell therapy business requires hundreds of millions of euros in ongoing investments, including obligations to employees. This financial burden has made it difficult to find buyers or investors, impacting the company's ability to sustain this business.
Employee and operational impact: The wind-down of the cell therapy business is expected to impact approximately 365 employees across multiple global offices and lead to the closure of sites in Leiden, Basel, Princeton, Pittsburgh, and Shanghai. This could disrupt operations and employee morale.
Market dynamics and financial strain: Evolving market dynamics and the financial strain of maintaining the cell therapy business have contributed to the decision to wind down operations, reflecting challenges in adapting to market conditions.
Regulatory and legal hurdles: The wind-down process is subject to consultations with works councils in Belgium and the Netherlands, which could delay implementation and create uncertainty.
Financial losses and impairments: The company reported an operating loss of EUR 462.2 million for the first 9 months of 2025, including a EUR 204.8 million impairment on the cell therapy business and EUR 135.5 million in strategic reorganization costs. These losses highlight financial challenges.
Dependence on partnerships: The company’s reliance on partnerships, such as with Gilead, for business development and financial support could limit its strategic flexibility and create dependency risks.
Uncertain future pipeline: While the company is focusing on business development and rebuilding its pipeline, the success of these efforts remains uncertain, posing risks to long-term growth and innovation.
Cell Therapy Business Wind Down: Galapagos intends to wind down its cell therapy business following consultations with works councils in Belgium and the Netherlands. The process is expected to conclude in Q1 2026. If implemented, up to 365 employees will be impacted, and sites in Leiden, Basel, Princeton, Pittsburgh, and Shanghai will be closed. The company will consider any viable acquisition proposals during the wind-down process.
TYK2 Program: The Phase III enabling studies for the TYK2 program are progressing ahead of schedule, with data expected by early 2026. The program focuses on GLPG3667, a differentiated oral TYK2 inhibitor for SLE and dermatomyositis. Results from these studies will guide the next steps for the program.
Financial Guidance: Galapagos anticipates ending 2025 with approximately EUR 2.975 billion to EUR 3.05 billion in cash, excluding business development activities and currency fluctuations. The company expects to be cash flow neutral to positive by the end of 2026, following the wind-down of the cell therapy business.
Business Development Strategy: Galapagos plans to focus on clinically derisked and differentiated opportunities that enhance the standard of care. The company aims to leverage its partnership with Gilead for joint acquisitions or licensing opportunities, with a focus on areas of strategic synergy. Financial discipline and value creation will be key priorities.
Cash Balance: Our cash balance of approximately EUR 3 billion represents approximately EUR 46 per share. This cash balance generates significant interest income. Through the first 9 months of this year alone, we received approximately EUR 77 million.
Income from Jyseleca: In addition, we are receiving an attractive stream of royalties and earn-outs from Gilead and Alfasigma on their sales of Jyseleca, the JAK program developed here at Galapagos. The income related to Jyseleca has been approximately EUR 15 million to EUR 20 million annually and is expected to continue into the mid-2030s with potential upside.
Tax Receivables: In addition, we expect to receive tax receivables of approximately EUR 20 million to EUR 35 million per year over the next 3 years with additional opportunities for credits beyond that.
Shareholder Return: Many investors have asked us whether we will return capital to shareholders. While our goal is ultimately to drive value for our shareholders, it's important to recognize that any return of capital would require alignment with Gilead given their 25% ownership and the terms of our existing partnership agreement with them. In addition, even as permitted, Belgium law imposes certain limitations on capital returns to shareholders. Given we do not have any distributable profits available at the current time, the ability to distribute would require a resolution at an EGM with at least 50% of shares present at the meeting and at least 75% approval. So again, while this could be an interesting alternative down the road, for now, we are focused on using our capital for business development opportunities.
The earnings call summary presents mixed signals. Financial performance shows a decrease in cash and interest income, but strategic currency shifts and stable income from royalties are positives. The Q&A highlights a focus on strategic partnerships, particularly with Gilead, but lacks clarity on deal specifics and internal pipeline strategies. The absence of strong guidance or new partnership announcements tempers expectations. Overall, the sentiment is balanced, suggesting a neutral stock price movement.
The earnings call presents a stable financial position with a significant cash reserve and a net profit, despite a high cash burn rate. The strategic partnerships and regulatory progress in CAR-T therapies, along with a focus on oncology and immunology, are positive indicators. The Q&A reveals confidence in addressing potential therapy side effects and ongoing business development. However, some concerns remain about competitive pressures and logistical challenges. Overall, the sentiment is positive, with potential for stock price growth driven by strategic advancements and strong cash management.
The earnings call summary reveals several concerns: increased cash burn guidance, safety issues in trials, and competitive pressures. The Q&A section highlights potential regulatory delays and safety concerns, particularly with Parkinsonism in CAR-T therapies, which could hinder growth. Although the cash position is strong, the financial risks and operational challenges outweigh positives. The management's vague responses in the Q&A add to uncertainties. Given these factors, the stock price is likely to react negatively over the next two weeks.
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