Galapagos NV

Welcome to the audio webcast of Galapagos' Q3 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 today. We 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 are Dr. Pau Sossos, CEO and Chair, and Sands Houston, CFO and COO. Paul will present the Q3 key takeaways and Saad will provide a financial update. He will also discuss the anticipated milestones and present concluding remarks. Please follow the presentation on your screen as we go through the call. We estimate that the prepared remarks will take approximately 20 minutes. We will then open the line for Q&A with Paul and Ted, who will also be joined by Dr. Jeevan Shetty, Head of Development Oncology, and Dr. Wolf Bucher, Head of Immunology. And with that, I'll now turn over to Paul.

Thank you, Sophie, and good afternoon, everyone. I would like to take a moment to share the strong foundation that we are building and how we have set up Calapagas for value creation. Today, we are a pure play biotech with a renewed R&D strategy to accelerate and bring innovative medicines to patients. We are moving forward faster with a focused, differentiated, and expanding R&D pipeline and competitive technology platforms. We're also making important regulatory and operational progress with our decentralized CAR-T network in Europe and the US. This slide summarizes our efforts to build a robust product pipeline that will enable us to accelerate future growth and drive value creation for all stakeholders. In doing so, we will focus on our key therapeutic areas of oncology and immunology to advance our R&D pipeline of potential best-in-class cell therapies and small molecule drugs. Today, we are developing four clinical candidates for 11 indications, and we have more than 15 preclinical programs. For further expansion and progress of our pipeline, we take a collaborative approach combining internal and external innovation. And finally, our strategy is supported by a strong cash position of €3.3 billion at the end of September 2024. In the third quarter of this year, we delivered on several important milestones. Let's start with our regulatory achievements. We are very pleased to have received the IND clearance from the FDA for GLPG5101, for which we have generated encouraging results in the Phase 1 to Atalanta study in Europe. We now plan to enroll our first patient in the U.S. in the Phase 2 expansion part of Atalanta study in non-Hodgkin lymphoma before year-end. Obtaining the IND clearance for our seven-day, vein-to-vein, fresh CAR-T decentralized manufacturing process was a crucial achievement for expanding the development of our cell therapies in the U.S. In Europe, we resumed recruitment for the GLPG5301 Phase 1-2 study in multiple myeloma following the announcement during our half-year results of a study pause. We are confident that we have put the right measures in place to resume the study. We are making significant progress with the proprietary pipeline that includes more than 15 programs, and we have selected two early stage pipeline candidates for clinical development. I will provide more information on this in the following slides. We continued the enrollment for the GLPG3667 Phase 2 studies in dermatomyositis and lupus, with top-line data expected in 2025 and 2026, respectively. We also selected the first decentralized manufacturing unit, Excellus in San Diego, within the nationwide network of blood centers of America. This is an important step in the expansion of the footprint of our cell therapy manufacturing network across the U.S. Let's come back to the key achievements on the regulatory front. The FDA's IND clearance of the Atalanta study for GLPG5101 in patients with non-Hodgkin lymphoma produced on a decentralized manufacturing platform marks an essential step towards realizing our vision of transforming patient outcomes through life-changing science and innovation. As a brief reminder, our decentralized cell therapy platform is a novel point-of-care solution that offers the potential for efficient median 7-day vein-to-vein time and avoids complex logistics, thereby addressing important limitations of current CAR-T treatments. The proprietary platform consists of our end-to-end workflow management and monitoring software system, a decentralized, functionally closed automated manufacturing platform for cell therapies, and the proprietary quality control testing and release strategy. Together, this allows for greater physician oversight and for production model near the patient that is globally scalable. Currently, we have three clinical trials running on this cell therapy platform. With the IND cleared, we can now start recruiting US patients into the Phase 2 expansion cohort of the Atalanta study. And we are actively initiating clinical trial sites in Boston region, and we plan to start enrolling patients with non-Hodgkin lymphoma in the study before year-end. We will leverage the learnings from GLPG 5101 prior to the submission of the GLPG 5201 IND for the Aplagia study in CLL, which we will now target to submit in early 2025. Before we move over to our pipeline overview, we wanted to highlight a recent publication in Blood Advances that analyzed several large CAR T clinical trials. The analysis points to vein-to-vein time as an important predictor of patient outcomes, where reducing vein-to-vein time can substantially improve life expectancy by up to 3.2 years. The paper states that aiming for short manufacturing, product release, shipping, and infusion times may be key to further improve outcomes for patients treated with CAR-T. We believe that these data underscore the importance of our efforts in this field. Let's look at our clinical pipeline. In oncology, we are progressing our Phase I-II CAR-T program, GLPG-5101 in NHL, As you know, Atalanta is a basket trial in a number of indications, which you see listed here on the slide. We are also progressing GLPG5201 in CLL and Richter transformation. And as mentioned earlier, we have resumed recruitment into the Phase I-II GLPG5301 study in multiple myeloma. I'm also pleased to announce that we will present new data from the Atalanta and Euplegia studies at the American Society of Hematology annual meeting in December. We added TCRT cell therapy to our pipeline following the clinical collaboration agreement with Adaptimune that was announced at the end of May. The agreement gives Galapagos the option to exclusively license Adaptimune's next-generation TCRT therapy, Usacel, targeting MAGE-A4 for head and neck cancer and potentially future solid tumor indications. Initial in vitro results suggest that Usacell, developed by Adaptimmune and produced on Galapagos' decentralized manufacturing platform, yields fresh, fit early phenotype T-cells. These cells could potentially improve efficacy and durability compared to the UZAS cell centrally manufactured on Adaptimmune's platform. Together with Adaptimmune, we will present these preclinical data at ASH. In immunology, we are progressing our Phase II study with GLPG3667 in dermatomyositis and lupus, with top-line results expected in 2025 and 2026, respectively. As we work to advance our programs in development, we are also investing in our discovery portfolio to identify future programs. We are making important progress in all our therapeutic areas. We have more than 15 internal programs in discovery across oncology and immunology with cell therapies and small molecules. From this discovery portfolio, we selected the differentiated next generation armed bispecific CAR-T candidate in hemato-oncology. In addition, we selected the potential best-in-class small molecule candidate in immunology, targeting clinical development in 2025-2026. We also continue to scout for external innovation to further build our early stage pipeline. In 2025, We expect to initiate at least four IND or CTA-enabling studies and at least one first-in-human study. From 2026 onwards, our aim is to fuel the clinical pipeline with at least two new clinical assets annually across cell therapy and small molecules. I now will pass it over to Ted for the financial update.

Thank you, Paul, and thanks, everyone, for joining today. Let's look at the financial results for the third quarter of 2024. During this quarter, we have worked on strengthening the foundation for our future growth. We continue to keep our focus on priority programs while investing in our pipeline and building our global cell therapy network. For our operations, revenue remained fairly stable year-over-year and consists mainly of the linear recognition of the platform for the Gilead collaboration. As explained in previous earnings calls, we see an increase in R&D costs as compared to last year. This is mainly driven by our investments in oncology, both in cell therapy and in small molecules, and includes the expense recognition of collaborations with BridgeGene and Adaptamine signed in the first half of the year. Over the first nine months of the year, we recorded a net profit of 49 million euros, driven by fair value adjustments in foreign exchange, as well as 71 million euros in interest income. We also report a net profit from discontinued operations of 69 million euros, mainly driven by the one-time gain for the Giseleca transaction with Alpha Sigma, as announced earlier this year. Now, over to our 2024 guidance. We reconfirm our full-year cash burn guidance of 370 to 410 million euros for 2024, including the business development transactions closed earlier this year. We report a net decrease in our cash position of €346 million for the first nine months of 2024. This decrease is composed of €321 million of operational cash burn, including €80 million related to business development activity executed in the first half of 2024. the cash-out related to the Gisellica transaction with Alpha Sigma, and an equity investment in Q1, as well as financial transactions, including the timing of interest income. Our cash balance at the end of Q3 amounts to 3.3 billion euros, supporting the build-out of our pipeline. I would also like to mention the collaboration that we closed a few months ago with Blood Centers of America as a partner for our cell therapy platform in the U.S., This collaboration significantly advances the expansion strategy using BCA's nationwide network to manufacture our cell therapy products close to the patient. As part of the collaboration agreement, we selected Xellos in the San Diego area as our first BCA manufacturing unit to produce GLPG5101 for the Atalanta clinical trial sites in the region. Turning to our key achievements and anticipated milestones, we received clearance for the IND application of the Atalanta study of GLPG 5101 in NHL. Our goal is to activate clinical trial sites and start enrolling patients in a Phase II dose expansion study in the U.S. before year-end. We target to submit an IND for our second CD19 CAR-T candidate, GLPG5201, in early 2025 for the eoplagia study in CLL and Richter transformation. Following the submission of a CTA to the European Medical Agency for the Phase II dose expansion of GLPG5201 and CLL1-Richter transformation, we plan to start enrolling patients in 2025. We have resumed recruitment into the Papillo Phase I, Phase II GLPG5301 study in multiple myeloma. We are very proud that at ASH later this year, we will present new data from the Atalanta and Eupalages studies. Together with our partner, Adaptimmune, we will also present preclinical data for the TCRT cell therapy candidate, Uzacel, produced on Galapagos' decentralized manufacturing platform. We continue enrollment in the Phase II studies with GLPG3667 and dermatomyositis and lupus. We further advanced our early-stage proprietary pipeline by progressing a next-generation armed bispecific CAR-T candidate. and a potential best-in-class small molecule candidate in immunology into IND-enabling studies. We are targeting clinical development in the 2025 to 2026 timeframe. We are accelerating our pipeline of more than 15 programs in oncology and immunology with the objective to launch at least four IND CTA-enabling studies in 2025 across different modalities and indications. Following the announcements earlier this year of collaboration agreements with Thermo Fisher, Blood Centers of America, and recently, Accelos, we continue to work on opening additional sites for a decentralized cell therapy manufacturing platform, both in the United States and in Europe. Earlier this year, we signed agreements with Bridgene and Adaptimune, and we continue to explore additional partnerships, research collaborations, licensing agreements, and acquisitions. Our business development efforts are focused on accelerating breakthrough medicines for patients in need. As already mentioned in the previous slide, we are building a future on strong partnerships. In the last couple of years, we closed partnerships to build our cell therapy capabilities, entered in research collaborations and licensing agreements, and execute on acquisitions and equity investments. We continue to focus on strategic business development to bolster our pipeline and optimize our operations. Let me conclude by coming back to the strong fundamentals that we have put in place to build a global innovative biotech and a clear path that we have toward value creation. We are progressing our early stage pipeline and building on our renewed discovery portfolio based on best-in-class targets to develop best-in-class medicines. While we push forward our internal programs, we remain active in business development. We continue to execute on our scientific progress in our key therapeutic areas of oncology and immunology, most notably our CAR T programs with GLPG 5101 and GLPG 5201. We have invested and continue to invest in strengthening our team in key positions globally. Finally, we have the benefit of a strong balance sheet and we commit to staying disciplined in our use of cash to focus our investments to maximize value. We want to thank our investors for their continued support as we deliver on our strategy to achieve sustainable value for shareholders. I also want to take this opportunity to thank Sophie for her many contributions to Galapagos over the past several years as she embarks on a new opportunity. Thank you, Sophie.