SOURCE: Galapagos NV

March 03, 2006 02:20 ET

Galapagos announces 2005 annual results

2006 revenues guidance of EUR 25 to EUR 30 million

MECHELEN, BELGIUM -- (MARKET WIRE) -- March 3, 2006 --

  * Full year 2005 revenues increase 44% to EUR  11.2 M
  * Net loss of EUR  6.5 M in 2005
  * BioFocus profitable in Q4 '05, contributing EUR  1 M to Galapagos
  * Operating cash burn of EUR  4.7 M in 2005, lower than guidance
  * Solid year-end cash position of EUR  23.6 M
  * Strategic acceleration via successful IPO and acquisition of
    BioFocus
  * Substantially expanded customer base
  * In vivo results from rheumatoid arthritis program validated drug
    discovery engine
Mechelen, Belgium; 3 March 2006 - Galapagos NV (Euronext & LSE: GLPG), a genomics-based drug discovery company, announces its full year results for 2005 and provides guidance for 2006.

Total revenue for 2005 increased with 44% to EUR 11.2 million, including the BioFocus plc acquisition, compared to EUR 7.8 million in 2004. The increase is the result of fourth quarter revenues generated by BioFocus plc, which was acquired October 17, 2005 and consolidated as of that date in Galapagos' revenues. The net loss for 2005 increased as planned to EUR 6.5 million from EUR 3.6 million last year, reflecting stepped up R&D program investment. Full year cash burn (excluding IPO and BioFocus acquisition costs) was EUR 4.7 million, compared to EUR 2.7 million reported in 2004. Cash and cash equivalents amounted to EUR 23.6 million on December 31, 2005, compared to EUR 10.3 million on December 31, 2004.

"Galapagos made several bold moves in 2005. As a result, the Company has grown strongly and has come to be recognized as an important European biotechnology company. We find ourselves in a phase of acceleration that continues into 2006," said Onno van de Stolpe, Galapagos' CEO. "By joining forces with BioFocus plc, Galapagos has achieved critical mass in drug discovery and has become an integrated player spanning all workflows from target discovery to the selection of drug candidates. Furthermore, we have made considerable progress in our in-house drug discovery programs for bone and joint diseases and are accelerating these compounds toward clinical development."

"The integration activities from Q4 are bearing fruit. The order book is strong and we have good visibility on 2006 performance," said David Smith, CFO Galapagos. "Our confidence in the revenue streams allows us to provide guidance on 2006 of between EUR 25 and EUR 30 million, a significant step change on 2005 pro forma revenues of EUR 17.5 million."

Key figures 2005

(EUR thousand, except net loss per share)


+-----------------------------------------------------------------+
|                           |         Dec 31, 2005 | Dec 31, 2004 |
|---------------------------+----------------------+--------------|
| Revenues                  |               11,240 |        7,777 |
|---------------------------+----------------------+--------------|
| Cost of sales             |               -4,829 |       -1,288 |
|---------------------------+----------------------+--------------|
| Gross profit              |                6,411 |        6,489 |
|---------------------------+----------------------+--------------|
| R&D expenditure           |               -6,700 |       -5,443 |
|---------------------------+----------------------+--------------|
| Sales, general, & admin   |               -6,158 |       -4,654 |
|---------------------------+----------------------+--------------|
| Integration costs         |                 -281 |              |
|---------------------------+----------------------+--------------|
| Other                     |                  187 |           19 |
|---------------------------+----------------------+--------------|
| Net loss for the period   |               -6,541 |       -3,589 |
|---------------------------+----------------------+--------------|
| Basic loss per share (EUR)|                -0.73 |        -0.60 |
|---------------------------+----------------------+--------------|
|                           |                      |              |
|---------------------------+----------------------+--------------|
| Cash and cash equivalents |               23,617 |       10,274 |
+-----------------------------------------------------------------+


Details of the financial results

Note: Consolidation of BioFocus plc results is effective from October 17, 2005.

Revenue

Galapagos' revenues for the full year 2005 increased by 44% to EUR 11.2 million (2004: EUR 7.8 million), attributable to the acquisition and consolidation of BioFocus plc in the fourth quarter of 2005. Of these revenues, EUR 9.1 million were generated by BioFocus (BioFocus plc plus Galadeno, the former service division of Galapagos).

Revenues generated by the former (without the BioFocus plc acquisition) Galapagos in fourth quarter 2005 amounted to EUR 1.4 million compared to EUR 4.2 million in the same period last year. This decrease is attributed to the large and unique nature of revenues in fourth quarter 2004, including the asthma target outlicensing to GSK and license payments Celgene and Wyeth. Excluding these agreements, sales in the two periods were comparable.

The newly formed BioFocus service division (BioFocus plc plus Galadeno) generated Q4 2005 consolidated revenues of EUR 7.4 million. Total Group revenues for Q4 2005 were EUR 7.9 million, exceeding previous guidance of EUR 7.7 million.

For comparison purposes, had the BioFocus plc acquisition occurred from January 1st, pro forma consolidated revenues of Galapagos and BioFocus plc would have been EUR 17.5 million in 2005, excluding inter-company sales of EUR 0.8 million.

Results

The net loss for the full year 2005 was EUR 6.5 million, or EUR 0.73 per share, compared to EUR 3.6 million, or EUR 0.60 per share for 2004. The main contributing factor to the planned increase of the net loss is an increase in research and development costs of EUR 1.3 million.

In Q4, BioFocus has contributed a profit of EUR 1,0 million to the result of the Group on a fully loaded basis. Total Group loss for Q4 2005 was EUR 0.9 million.

Total research and development expenses in 2005 were EUR 6.7 million, compared to EUR 5.4 million in 2004. The additional investment in R&D allowed us to progress into drug discovery a number of bone and joint targets, with the published result of our lead compound in rheumatoid arthritis that successfully showed reduced paw swelling in a mouse model.

Cash flow and cash position

Galapagos raised EUR 22.4 million in a public offering priced at EUR 7 per share, amounting to a net cash contribution of EUR 20.8 million. Full year operational cash burn, excluding the IPO and BioFocus plc acquisition, amounted to EUR 4.7 million, a reflection of continued cash management.

Galapagos' cash and cash equivalents amounted to EUR 23.6 million on December 31, 2005.


Financial outlook 2006

Galapagos expects the full-year revenues for 2006 to fall within the range of EUR 25 to EUR 30 million, a 40 to 70% increase over pro forma revenues of EUR 17.5 million in 2005. The Company expects a maximum investment in research and development of EUR 9.0 million, a 34% increase over 2005, for progression of Galapagos' internal drug discovery programs in 2006.


Corporate highlights

Galapagos' fourth quarter highlights for 2005 include:

  * Proof of Concept (in vivo) in rheumatoid arthritis
  * Completion of the acquisition of BioFocus plc and listing on the
    AiM in London
  * Integration of Galapagos' service unit, Galadeno, and BioFocus
    plc completed
  * Executive Committee strengthened with the addition of David Smith
    as CFO, Chris Newton as Senior VP BioFocus, and David Phillips as
    Senior VP Sales & Marketing
  * Secured US patent further protecting our adenoviral based target
    discovery platform
  * BioFocus' North American sales office opened in Boston
Operational highlights

Partnering activities

More than 20 agreements were signed with top biotech and pharmaceutical companies in 2005, many of them extensions or expansions of existing collaborations. New collaboration agreements were signed with Idenix, Novartis, GSK, Lilly, Senexis, Prolysis, Celera Genomics, the Cystic Fibrosis Foundation and the High Q Foundation.

In the fourth quarter, several large agreements with both new and existing customers for BioFocus were concluded:

  * Idenix Pharmaceuticals entered a two-year drug discovery
    collaboration with BioFocus worth up to $ 2.5 million with the
    aim to discover compounds for Idenix's infectious disease
    programs.
  * Senexis expanded their collaboration with BioFocus to optimise
    Senexis' novel inhibitors of amyloid-induced toxicity and
    neuroinflammation for the treatment of Alzheimer's disease.
  * Amgen expanded its drug discovery collaboration with BioFocus.
    The multi-million dollar deal, which includes a $ 2.3 million
    upfront fee for biology and computational/medicinal chemistry
    services, will run throughout 2006.
  * Prolysis and BioFocus extended their research collaboration
    announced earlier this year.  Prolysis will fund the medicinal
    chemistry program aimed at identifying dual enzyme inhibitors
    that can overcome the problem of antibiotic resistance throughout
    2006.
  * BioFocus entered into a collaboration with Cresset BMD to develop
    a new range of compound libraries.  This new product offering
    will further strengthen BioFocus' competitive edge in targeted
    compound libraries for high-value drug targets such as GPCRs and
    ion channels thereby accelerating BioFocus customers' drug
    discovery programs.

Galapagos drug discovery

  * A number of targets validated through Galapagos target discovery
    engine are being progressed through Galapagos' internal drug
    discovery programs in bone and joint diseases.
  * In our rheumatoid arthritis program, we aim to develop safe and
    orally available therapeutics to reduce and even stop joint
    destruction and inflammation.  Galapagos' rheumatoid arthritis
    targets were discovered and validated in disease-relevant assays
    that use cells derived from rheumatoid arthritis patients.  A
    number of these targets are being progressed through Galapagos'
    internal drug discovery program.  A lead compound, from a series
    that was designed against the most advanced kinase target,
    successfully demonstrated an in vivo Proof of Concept in the
    industry standard rheumatoid arthritis animal model.  In this
    mouse model, the lead compound modulated pro-inflammatory
    cytokines (regulatory proteins that mediate the immune response)
    such as TNF-alpha and those interleukins that are known to play a
    pivotal role in the arthritis process.  In addition, the lead
    compound showed a reduction in paw swelling in this mouse model.
    We will now focus our resources on accelerating this compound
    series, and the rest of the target portfolio towards clinical
    development.
  * These results provide strong validation for our target discovery
    platform to deliver novel targets that can be the basis for the
    development of disease modifying drugs.

Annual report and annual shareholder meeting

The electronic version of Galapagos' Annual Report 2005 is now available online at www.glpg.com/investor/financial_reports.htm. Printed versions of the Galapagos Company Report 2005 will be available shortly and can be requested by e-mailing ir@glpg.com.

Galapagos' 2005 annual shareholder meeting will take place at Galapagos' headquarters in Mechelen, Belgium on April 4, 2006 at 18.00 Central European Time (CET).


Conference call and webcast presentation

Galapagos will conduct a conference call open to the public today at 09.30 Central European Time (CET), which will also be webcast. To participate in the conference call, please call +32 2290 1608 ten minutes prior to commencement. A question and answer session will follow the presentation of the results. The live audio webcast can be accessed via Galapagos' website at www.glpg.com, and will be available for replay a few minutes after the live version airs.

About Galapagos

Galapagos is a publicly traded, genomics-based drug discovery company (Euronext Brussels, GLPG; Euronext Amsterdam, GLPGA, London AiM: GLPG) that has drug discovery programs based on proprietary, novel targets in bone and joint diseases - osteoarthritis, osteoporosis and rheumatoid arthritis. Galapagos offers a full suite of target-to-drug discovery products and services to pharmaceutical and biotech companies through its division BioFocus, encompassing target discovery and validation, and drug discovery services through to delivery of pre-clinical candidates. In addition, BioFocus provides adenoviral reagents for rapid identification and validation of novel drug targets and compound libraries for screening. Galapagos currently employs more than 200 people, including 80 PhDs, and occupies facilities in Mechelen, Belgium, Saffron Walden, UK and Leiden, The Netherlands. The partners of Galapagos include Amgen, AstraZeneca, BASF, Bayer, Boehringer Ingelheim, Celgene, GlaxoSmithKline, Idenix, Novartis, Organon, Serono, Vertex, and Wyeth. More information about Galapagos and BioFocus can be found at www.glpg.com.

CONTACT

Galapagos NV
Onno van de Stolpe, CEO
Tel: +31 6 2909 8028
ir@glpg.com
This press release may contain forward-looking statements, including, without limitation, statements containing the words "believes", "anticipates", "expects", "intends", "plans", "seeks", "estimates", "may", "will" and "continues" as well as similar expressions. Such forward-looking statements may involve known and unknown risks, uncertainties and other factors which might cause the actual results, financial condition, performance or achievements of Galapagos, or industry results, to be materially different from any future results, financial conditions, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, the reader is advised not to place any undue reliance on such forward-looking statements. These forward-looking statements speak only as of the date of publication of this document. Galapagos expressly disclaims any obligation to update any such forward-looking statements in this document to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless required by law or regulation.


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