Galapagos NV

And welcome all to the audio webcast of Galapagos' H1 2024 results. I'm Sophie van Heersel, Investor Relations, representing the reporting team at Galapagos. This recorded webcast is accessible via the Galapagos website homepage and will be available for download and replay later on today. I would like to remind everyone that we will be making forward-looking statements during today's webcast. These forward-looking statements include remarks concerning future developments of the pipeline and our company and possible changes in the industry and competitive environments. Because these forward-looking statements involve risks and uncertainties, Galapagos' actual results may differ materially from the results expressed or implied in these statements. Today's speakers will be Paul Stoffels, CEO, and Thad Houston, CFO and COO. Paul will reflect on the first half of 2024 and discuss our pipeline and programs. Ted will provide a financial and operational update and discuss the outlook for 2024 and present concluding remarks. You will see a presentation on screen. We estimate that the prepared remarks will take about 20 minutes. Then we'll open it up to Q&A with Paul and Ted, joined by Jeevan Shetty, Head of Development Oncology. And with that, I'll now turn it over to Paul.

Thank you, Sophie, and good afternoon, everyone. I would like to start with bringing back this slide that we showed at the first quarter results, summarizing our vision and our strategy to drive value creation for all stakeholders. We transferred Jaiselica and successfully transformed Calabros into a pure-play biotech with a revitalized pipeline, and we are investing in the elements that we believe we need to make our strategy successful. We focus on our key therapeutic areas, oncology and immunology, where significant unmet medical needs remain for patients. Our strategy is to spearhead our efforts with indications that have breakthrough designation potential in oncology and immunology, and we are building a broad pipeline of potential best-in-class cell therapies and small molecule drugs. We put in place strong leadership with a track record of delivering transformative drugs to patients around the globe, taking a collaborative approach, combining internal and external innovation. And finally, our strategy is supported by a strong cash position of 3.4 billion euros at the end of June 2024. We are building a pipeline and a manufacturing network to support our cell therapy vision, and we are optimistic that it will enable us to accelerate future growth. In the first half of this year, we delivered on a number of important milestones. Let's start with the regulatory achievements. We are pleased to share that we have submitted the IND for the FDA for Atalanta Phase 1-2 study of 5-101 in refractory relapsed non-Hodgkin lymphoma. Obtaining regulatory approval is a crucial step to conduct clinical trials with our cell therapies in the U.S., which is a key element of our growth strategy. We submitted a CTA with the European authorities for the eplagia phase 1-2 study of 5201 in refractory relapsed chronic lymphocytic leukemia and Richter's transformation. We made important clinical progress with our Phase 1-2 studies of 5-101 and 5-201 respectively, and we presented additional encouraging safety, efficacy, durability, and translational data at scientific conferences. We are making significant progress with our proprietary pipeline now comprising of 20 small molecules and cell therapy programs. I will give more color on this in the following slide. We're also significantly expanding the footprint of our cell therapy manufacturing network, not in the least through the agreement signed with Blood Centers of America for the U.S. territory. And finally, with the collaboration announced with Adaptimmune, we took an important first step into the cell therapy solid tumor space with TCRT cell therapy. Now over to our pipeline. In our two therapeutic areas of oncology and immunology, we aim to deliver best-in-class therapeutics. In oncology, we are progressing our Phase I-II CAR-T programs, 5-101 in NHL and 5-201 in CLL and Richter Transformation. As mentioned, I'll come back to the clinical progress presented at EHA for 5-101. We presented additional encouraging safety data, safety, efficacy, and translational data with 5201 at EBMT in April this year in 14 patients with relapsed refractory CLL and Richter's transformation, showcasing deep and durable responses in this critically ill patient population. In the Papilio Phase 1-2 BCMA-directed multiple myeloma program with 5301, we observed one case of Parkinsonism. Patient safety is a key priority, and therefore, we temporarily post enrollment protocol guidelines to evaluate this event. Parkinsonism has been reported previously in BCMA and CAR-T cell therapy studies, and we believe that with the implementation of a comprehensive and specific measure, this can be safely managed. The study protocol was amended and submitted to the EMA in June, and we anticipate resuming recruitment in the coming months and aim to report data from the study at the medical conference in 2025. While we advance therapies that we have developed internally, we believe that a robust pipeline should also include promising therapies developed externally. Thanks to the collaboration and licensing agreement with Adaptimmune, signed and announced at the end of May, we also added TCRT cell therapy to our pipeline. To option to exclusively license Adaptimmune's next generation TCRT cell therapy user cell, targeting May's age four, we took a first step in head and neck cancer at potentially additional solid tumor indications with our decentralized manufacturing platform. In their phase 1 CIRPAS trial with centrally manufactured Uza cell, Adaptimmune has already shown encouraging results in head and neck cancer with an overall response in 4 out of 5 patients. Initial in vitro results suggest that UsaCell produced on Galapagos decentralized manufacturing platform yields fresh, fit, early phenotype T cells in seven days that could potentially improve efficacy and durability compared to the UsaCell centrally manufactured on Adapt Immune's platform. In addition, the vein-to-vein time of seven days is important for patients in whom rapid access to treatment is vital. In immunology, we are progressing our two phase two studies with 3667 in lupus and dermatomyositis. As we work to advance programs in development, we are also investing in our discovery portfolio in small molecules and cell therapies to identify the programs of tomorrow. We are making important progress through our therapeutic areas, and we have over 15 internal programs in discovery across oncology and immunology with small molecules and cell therapies. We also continue to scout for external innovation to further build our early-stage pipeline. We recently expanded our strategic collaboration and licensing agreement with BRIDGENE Biosciences to include the discovery and development of a highly selective oral SMARCA2 small molecule, or PROTAC. In 2025, we expect to initiate at least four IND or CTA-enabling studies and at least one first-in-human study. From 26 onwards, our aim is to fuel the clinical pipeline with at least two new clinical assets annually across cell therapy and small molecules. As mentioned, we were happy to present encouraging new data from our Atlanta study with 5101 in NHLN at the EHAC conference in June. A quick reminder about the design of the study, which consists of a Phase I dose escalation part and a Phase II expansion part. The study is a basket trial in critically ill NHL patients. The CAR-T cells are manufactured using a decentralized platform with a vein-to-vein time of seven days. The Phase I primary objectives are to establish the safety profile and recommended Phase II dose. The Phase II primary objective is efficacy as measured by objective response rate. Here you see the pooled Phase I-II efficacy results for 31 patients. We observed high objective response and complete response rates over the different indications. In patients with diffuse large B-cell lymphoma, 7 out of 9 patients responded, and complete responses were seen in 5 out of 9 patients. In patients with follicular lymphoma or marginal zone lymphoma, complete responses were observed in 16 out of 17 patients. In patients with mantle cell lymphoma, complete responses were observed in all five patients. Looking at the responses over time, we saw that the results were durable in the majority of responding patients. 10 of 14 patients responding in Phase 1 had an ongoing response at data cutoff with a median follow-up of 13.1 months. Four patients in Phase 1 progressed after initial response. Two had the CD19 positive relapse. One had the CD19 negative relapse, and one patient was unconformed. In Phase 2, which started more recently, All 14 patients responding had an ongoing response at data cutoff with a median follow-up of 4.2 months, and one patient in Phase 2 progressed after an initial response. Turning over to the safety results now, it is a busy slide and I will not get into detail, but summarizing, we see the vast majority of CRS and ICANN events were low-grade. This is very encouraging and confirms the data that were previously shared at ASH in December of last year. As we previously disclosed, two deaths occurred during the study. One intra-abdominal hemorrhage caused by grade four disseminated intravascular correlation in dose two level, dose level two, and one grade five urosepsis event was reported in follow-up more than six months after infusion and while the patient was in complete response. one additional patient died due to disease progression. This updated patient set of 33 patients in total confirms the data presented earlier on the 23 patients. The observed safety, efficacy, and durability are very encouraging, providing additional data to show potential beneficial role of a short vein-to-vein time, robust in vivo expansion, and preservation of early T-cell phenotype on clinical outcomes. The data demonstrate that with our innovative cell therapy manufacturing platform, we can infuse fresh fit cells with a median vein-to-vein time of just seven days with heightened complete response rates across indications in heavily pretreated patients. I would now like to hand it over to Tad for the financial update and the outlook for the remainder of 2024. Tad?

Thank you, Paul, and thanks, everyone, for joining today. Let's take a look at the financial results for the first half of 2024. During the first half of 2024, we have worked on strengthening the foundation for future growth. We divested Giseleca, which enabled us to focus on our priority programs and invest in our pipeline and building our global cell therapy network. You will see our strategy reflected in our financial results. In January of 2024, we transferred the Giseleca business to Alpha Sigma, As a result, the Giseleca results moved to discontinued operations. For our continued operations, revenue remained fairly stable year over year, and mainly consists of the linear recognition of the platform for the Gilead collaboration. A small part is coming from the remaining Giseleca royalty income and inventory sale of the product to Alpha Sigma. As explained in our Q1 earnings call, we see an increase in R&D costs as compared to last year, which is mainly driven by our investments in oncology, both in cell therapy and small molecules. We reported a net profit driven by fair value adjustments in Forex, as well as €49 million in interest income. Also, we reported a net profit from discontinued operations of €71 million, mainly driven by the one-time gain of €52 million for the Giseleca transaction with Alpha Sigma. Now over to our 2024 guidance. Excluding business development activities to date, we reconfirm our full-year cash burn guidance of €280 to €320 million. The updated cash burn guidance accounting for the deals that we executed in the first half of the year is €370 million to €410 million for 2024. This is mainly driven by the Adaptimmune collaboration, which accounts for €79 million. We reported an operational cash burn of €250 million in the first half of 2024. Note that this comes on the higher end due to the announced collaborations with Adaptimmune and other smaller business development transactions. the phase transition services for Jselek at Alpha Sigma, which mainly happened in Q1, as well as the timing of interest, income, and tax credits. Our cash balance at the end of H1 amounts to €3.4 billion, supporting us to execute on research and development and collaboration opportunities. In the last couple of years, we closed strong partnerships to build our cell therapy capabilities entered into R&D collaborations and licensing agreements, and executed on acquisitions and equity investments. We continue to focus on strategic business development to bolster our pipeline and optimize our operations. I would like to highlight the collaboration that we closed a few months ago with Blood Centers of America as a partner for our cell therapy platform in the United States. Following the earlier announced collaborations with Landmark Biome Boston, and Thermo Fisher in the Bay Area. The collaboration significantly advances the expansion strategy of our platform in the US as BCA's national network will allow us to manufacture our cell therapy products close to the patient across the US. The network will support our planned pivotal trials and help us gear up for commercial readiness. Now turning to our outlook for 2024. We anticipate important regulatory progress with our CAR T trials in the U.S. To recap what Paul explained, we submitted the IND for our NHL trial. We also submitted a CTA to start the phase two dose expansion with 5201, and we are on track to submit the IND for 5201 in CLL and Richter transformation later this year. In H2, we will also share further data on the safety, efficacy, and durability of our ongoing CAR T programs 5101 and 5201. Operationally, we are working on opening additional sites for our decentralized cell therapy manufacturing, both in the U.S. and in Europe. We will leverage the BCA collaboration to open sites across the U.S. and are exploring additional partnerships for our cell therapy network across the globe. We also aim to execute on additional licensing agreements and acquisitions as well as research collaborations. Our business development efforts serve our overarching purpose of accelerating breakthrough solutions to patients in need. Let me conclude by coming back to the strong fundamentals that we have put in place to build an innovative biotech company and the clear path that we have towards value creation. We are progressing our early stage pipeline, building on our renewed discovery portfolio based on best-in-class targets towards best-in-class medicines. Thanks to the progress made, our goal now is to initiate at least four IND CTA-enabling studies and at least one first-in-human study in 2025. While we push forward internal programs, we remain active in business development. The ADAPT Immune Collaboration announces a good example of how our BD efforts broaden our portfolio as it marks our first expansion into TCRT cell therapy in solid tumor. We continue to execute on our scientific progress in our key therapeutic areas of oncology and immunology, and most notably our CAR T programs with 5101 and 5201. We have invested and continue to invest in strengthening our team in key positions globally. Finally, we benefit from a very strong balance sheet. We commit to staying disciplined in our use of cash to focus our investments to maximize value. And we want to thank our investors for their continued support as we deliver on our strategy to generate sustainable long-term value for shareholders.